As Small Caps Get the Bigger Gains, What's Next for Volatility?
Are we still on track for a volatile June?
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The Market
Everyone is turning bullish on the Russel, just as the IWM, an ETF proxy for it, gets ready to tag that 215 resistance.
But that is anecdotal. I continue to see complacency in the options ratios but not in the surveys, with the exception of NAAIM, and even that is not terribly high. Perhaps that will change this week now that the small caps are a favorite.
Breadth finally made a higher high today (bullish), but the number of stocks making new highs continues to meander sideways.
The better breadth has kept the turn upward in the McClellan Summation Index intact. It now needs a net differential of -900 advancers minus decliners on the NYSE to change it. Still neutral but improving.
Bonds stopped going down and tried to rally. But the Utes are starting to go from ‘not great’ to ‘concerning’. There have now been two attempts at a breakout, and neither one has managed to stick. If XLU breaks 79, this will become problematic.
PALL, an ETF to be long Palladium that I liked several weeks ago, has been climbing nicely. There is a measured target in the 105-ish area, but let me report that the DSI on Palladium is now 67, so it still has some room on the sentiment front. However, many of you have been trading Platinum, so I feel compelled to report the DSI is 86 for Platinum. That probably means these metals need a little rest.
One final comment: I was asked if I still think we get some volatility in June. I do. Did you notice the VIX was green today?
New Ideas
Not long ago, I was asked about Wynn Resorts WYNN, and I was not a fan. However, the stock has come down nearly 13% and is starting to shape up much better. It probably has some fits and starts, but this low 80s area should hold.
Today’s Indicator
The 30-day moving average of the advance/decline line is still overbought.
Q&A/Reader’s Feedback
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I cannot recall when I first recommended Abbott Labs ABT, but I think it was in the middle of 2024. In April, I noted that it had finally come down to test the breakout, and so it was buyable. It has done okay since then, not great. You can see all those levels on the weekly chart.
The daily chart has me concerned a bit because it has gone nowhere. I’d use a stop under 127 now. A breakout over 136-ish would help improve the chart.
Navitas Semiconductor NVTS gapped up over resistance and has kept on going. It measures into this 7-7.50 area, although when it comes to measured targets, single-digit stocks don’t always cooperate. So, I looked at the weekly chart and lo and behold, it turns out this 7-7.50 area has been a problem for quite some time. I am never going to be comfortable chasing a stock like this, so if it gets through this resistance, I’d consider that a plus. Use a stop under 6-ish.
Carnival Corp CCL has had a nice run right into resistance, but it hasn’t done anything wrong. But as someone who prefers stocks that are down and out, I would wonder if you should instead look at Norwegian Cruise Lines NCLH because that hasn’t moved yet, and if it can get over 21, it has room to the mid to upper 20s before it hits resistance.
