After Coca-Cola Beat, Pepsi Is Worth a Shot on One Condition
As market excitement over staples rises, the soda rival could offer a good trading opportunity.
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The Market
There is a debate between the bulls and the bears. Oh, sure, there is always a debate but when the market has spent as much time chopping about as it has recently, folks with opposing views tend to get more snippy than usual.
The debate goes like this: The bulls say the market has had its fair share of chances to go down, so naturally it will resolve to the upside. The odd thing is that the bears have the exact same point to make: the market has had ample opportunity to rally and it has refused to. As I said last night, I would love to pick a side, but I can’t.
If you are wondering if today cleared anything up, it did not. Breadth was flat so it was inline with the S&P. That means the McClellan Summation Index did not turn down, although it also did not resume its upside. The VIX was green but by such a small amount it isn’t worth discussing.
There are, however, a few things that have changed this week. The number of stocks making new lows on Nasdaq continues to creep up. Today, there were just over 200 new lows. Last Monday (February 3) Nasdaq had 234 new lows. Nasdaq is up about 200 points since then. Put that on the negative side of the ledger.
Then there is the speculation on Nasdaq. It cooled off for quite some time but it’s back this week. You can see it by looking at the volume totals. This week Nasdaq’s volume is back to clocking in at around 9.5 billion shares. Heck, on Monday, one penny stock — and I do mean pennies, since it closed at 12 cents on Monday — traded 2 billion shares on the day.
Sure a penny stock is no big deal, but that means if we took it out of the share count we’d have seen Nasdaq volume at 7.6 billion shares. That leans high but would not have caught my eye. It is so noteworthy because the volume in the QQQs couldn’t even get to 20 million shares today. Average volume for the QQQs has been 30 million shares and today they traded 18 million.
Again, normally, for a choppy day we’d expect that. But not when total volume on Nasdaq is over 9 billion shares. So it’s the speculation that bothers me about that.
Perhaps the CPI will move the market tomorrow.
New Ideas
Everyone seems quite excited over the staples today. Probably because Coke KO gapped up (we looked at KO on Sunday evening). So, I would just remind you that I still think Pepsi PEP is worth a shot here as long as it stays over those twin lows.
I would also point out that Alibaba BABA finally filled that gap from October. That was my initial target.
Today’s Indicator
The McClellan Summation Index is discussed above.
Q&A/Reader’s Feedback
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Let me preface this section by noting there are a lot of small-cap names being asked about. I’m happy to look at them, but my work tends to lend itself to larger names, not small-cap ones. Small caps tend to trade way too thinly which means they break levels and snap back very often.
Waters WAT has a measured target of 440-ish. Trading back under the blue line would be a problem for me.
Corcept Therapeutics CORT is a stock in an uptrend with a next measured target not far away, around 70. The uptrend line is your support/stop area.
Intapp INTA has had some wild moves of late. Minor support is the uptrend line, but I would view 60 as important. There is no pattern that makes this a top yet. To get a top would mean a move down to 60-ish and a failing rally.
Mirun Pharmaceuticals MIRM hasn’t done anything wrong. There is a next measured target around 54. There is light support at 47 if you are looking to buy it.
Deere DE hasn’t done anything wrong but the measured target off that base was 480 which is where it got to. If it can go sideways and digest the recent move then it sets up another pattern we can look at but otherwise I see no reason to chase.
Newmont NEM has a short-term measured target around 47 with resistance at 50, so I’ve been eyeing that area of 47 to 50. But I am also monitoring the DSI for gold which has not yet tagged 90, shockingly.
