Are Speculators Leaving the Market?
The bad news is that we're still overbought. But today, the AI stocks got hit, following on the backs of the quantum stocks and crypto garbage in prior weeks.
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The Market
Note: I will do a market video PreMarket Prep Tuesday morning at 8:30 am if you would like to tune in, here is the link. https://www.youtube.com/live/vnKEgnqmMso
If you had no idea what the indexes did today, you would think today was a slightly up day in the market. For example, net breadth on the NYSE was +400. That compares to Friday’s +350.
But today was about the index movers and move the index they did. From my vantage point, all that happened today was that we got that bout of volatility from that low reading of the VIX put/call ratio, we reacted to the too-low put/call ratio’s 10-dma, and we reacted to the overbought condition. In other words, the indicators did not change much.
The best news is that this is yet another sign of speculation leaving the market. We had the quantum stocks die a few weeks ago. We’ve had the crypto garbage flounder, and now AI got its turn.
Was there panic? Maybe a tad in the likes of AI stocks like NVDA but when Nasdaq has 63% of the volume on the downside that’s not panic. The QQQs did have a decently high volume day at 58 million shares so at least we got that.
Now for the bad news: we are still overbought and that needs to get worked off. And the ten-day moving average of the put/call ratio is still too low. Today’s reading was .89 so there was no panic there.
In terms of the bonds, at least the TLT pattern is doing its best to play out as I drew in a week ago. Now, it needs to get over this 88.50 area. Just in case I am wrong I’m going to put a stop in at last week’s low. If we break out then I will move it up to that 88 area.
New Ideas
McDonalds MCD had one heckuva day and powered over that 290 target I had. It’s got some resistance here so on a trading basis I would take a few profits, but I’m going to hold on to some since no one is chatting it up yet.
I have been asked about Albermarle ALB which has been so disappointing but it keeps bouncing off this mid 80s area and since it’s hard to find stocks that are oversold and this one seems to be oversold I think it bounces from here. Under 85 and I am wrong.
Today’s Indicator
The 30-day moving average of the advance/decline line is still not yet overbought.
Q&A/Reader’s Feedback
Hewlett Packard Enterprise HPE tends to have spike highs that have no follow through whatsoever (see March, June, and December) so I am inclined to think this latest move to 24.50 is similar. It ought to bounce off 21-22 but I’m not inclined to like it there. The chart needs to do some work before I’d be interested in buying it. A break of 21 would be bearish.
BITO had a measured target around 24-25, so now I’d call it a hold with a stop under 22, especially if it breaks 22 in mid to late February because that’s when the uptrend line meets that flat line.
Microstrategy MSTR hasn’t made a higher high since November but it hasn’t broken under 300 yet either. It looks like a top to me, but unless/until it breaks 300 this could just be one giant sideways.
Rigetti RGTI is one of those quantum stocks I have railed about. At least this one didn’t used to be a beverage company. The only thing I can say is that there is decent support in the 6 area otherwise it looks like a speculative chart that has lost its luster.
Novo Nordisk NVO ought to try and fill that gap near 100. If it can go sideways a bit longer, it should gather enough momentum to do so. I would prefer it does not come down and fill that gap at 80. Sideways would be better, as it did today.
