AI, Crypto, and Quantum. Oh My!
The only trending stocks are those in AI, Crypto, and Quantum.
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The Market
It’s an AI world, and we’re just living in it. Oh, and crypto. And quantum. And weirdly, banks.
I fully expected to see the number of stocks making new highs expand with the Russell 2000 at a new high, but that was not the case. The NYSE had 148 new highs. Just a week ago, there were 244. Nasdaq fared a bit better in that there were 437 new highs, but a week ago, there were 481.
Is the market getting narrower or is it broadening out? That’s the question the folks on financial TV ask daily. I wish they would stop. It is not about broadening out, because that is not what is happening.
Breadth has been good, not great. New highs have been good, not great. What we have is a group rotation/stock pickers market. There are days when the Mag 7 are all anyone wants, and the others suffer, and there are days when the others get the love and the Mag 7 get the day off. This constant rotation is what we’ve had for nearly two months.
The only trending stocks are those in AI, Crypto, and now Quantum.
Did you see the restaurant stocks today? We had two more disappointments as Cracker Barrel and Darden disappointed. That is why I will still keep my eyes peeled on names like Costco for signs that it holds that uptrend line I have written about several times lately.
Today, there was a new group that got smacked. It’s not a big group, and unlike the restaurants where we can say the consumer is pulling back, this doesn’t have the same narrative. But I still think when a stodgy stock like Moody’s MCO gets taken to the woodshed, it is worth noting.
Sure, it has support in that 470 area, but there are some serious air pockets out there.
On the sentiment front, just as I was surprised to see the DSI for Nasdaq at 84 yesterday, I am surprised to report it didn’t budge again today. It remains at 84. The S&P is at 82.
I still think we need a pullback, although with all the group rotation, individual stocks seem to be doing just that.
New Ideas
Match Group MTCH has nothing to do with any tech, although maybe someone will decide to use AI to match folks up! This is a weekly chart, so if it can breakout, that would be a plus.
Then there is Visa V, which used to be a darling, but it hasn’t made a new high since June and, in fact, hasn’t made a higher high since then. It has been holding this line every time it visits it. A break of that uptrend line would be bearish.
Today’s Indicator
The ten-day moving average of the put/call ratio is low. Yesterday’s high reading morphed into a reading back under .80 today.
Q&A/Reader’s Feedback
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You might recall back in July, I liked Tesla TSLA but thought the 360 area was the best it could do. Clearly, that was wrong. The breakout measures to the 420 area, and there is resistance up here. But the stock hasn’t done anything wrong. I would be inclined to take some profits on a trading basis, all the same, and wait for a better setup.
Robinhood HOOD has a measured target around 125, and the high today was just over 124. The stock hasn’t done anything wrong, though. If it comes back to fill that gap at 105, it would be worth a stab on the long side.
Alibaba BABA has a measured target around 160 and another around 180. It is over-extended, same as I noted with my pick Baidu last night. I think it is vulnerable to a pullback, but it’s unclear how far because that weekly chart has one heckuva base it just broke out of. If it came back to the 140 area, it would probably shape up again.
