Average Joes Are Bullish on Stocks. Pros Are Bullish on Volatility.
It's probably better to side with the pros over the Joes.
You're reading 0 of 1 free page.
Register to read more or Unlock Pro — 50% Off Ends Soon
The Market
Now that was an interesting day. In the end, I’m not sure it told us much except that folks bailed out of software stocks, but we already knew that was happening.
What I liked about today’s market was that the breadth stayed flat to positive almost the entire day. I am always a fan of when the breadth outperforms the indexes. I also liked that the VIX had another spike.
What I did not like is that the new lows expanded quite a lot, on both the NYSE and Nasdaq, especially on Nasdaq. They are now nearly double what they were at the beginning of the week.
I liked that the Bank Index held. I liked that the Transports hung in there (and rallied), and I liked that the Utes hung in there.
And the precious metals—or really all metals—I’m not even sure what to say except when things get so volatile, and there has certainly been volatility there, it feels to me like we should be on our toes. The DSI has still not gotten to 90. Today saw it back off to 85 (for Silver as well). It feels over-cooked to me, but it felt that way to me two or three weeks ago.
Back in late November, I said the SOX was oversold, and each time I have been asked about it or a semi stock I note that it is still not overbought. For the first time since then, the SOX has stepped a toe into overbought territory. It’s not as overbought as it was in October, but it is definitely no longer oversold.
There is sentiment which didn’t see much change, but I know everyone loves to quote the AAII bulls and bears because those folks always seem bearish but each week they not only survey them on if they are bullish or bearish for the next six months but they have one question (changes each week) that they pose.
This week, they asked what folks’ expectations were for the S&P for the year 2026. They had five categories:
Up between 2 and 9%, Up 10% or more, flat, or down between 2 and 9% or down 10% or more.
The folks who are in the camp that they expect the S&P to be up on the year number 70%. I cannot explain why the bulls (the next six months) is only at 44%. Those who expect the S&P to be down on the year come in at 17%. I suppose it could be the way they ask the question but it’s pretty clear these folks are bullish and complacent as well.
New Ideas
Someone inquired about Uber (UBER) a week or so ago and I was mostly non-plussed. Earnings are next week but at least now the risk/reward is better because if it trades under this 79-80 area, we’re wrong. I think it can bounce before earnings.
Today’s Indicator
The ten-day moving average of the put/call ratio is at .83 (that’s low). But it’s the 21-day moving average of the VIX put/call ratio I want to look at now. It doesn’t tend to get into this area and go under it very often. When the put/call ratio for the VIX is high I take it as bullish because the pros are betting on a lower VIX (we want to be with the pros). When it gets this low it’s because they are betting on a higher VIX.
Q&A/Reader’s Feedback
Helene welcomes your questions about Top Stocks and her charting strategy and techniques. Please send an email directly to Helene with your questions. However, please remember that TheStreet.com Top Stocks is not intended to provide personalized investment advice. Email Helene here.
The first thing I notice about the chart of AIRO (AIRO) is that it filled the gap (from November) but couldn’t get to the resistance line. It just speaks of a stock that is not that strong. I would like to see how it handles a move down to 9-10 to test that short-term breakout. My initial thought is it should hold it and perhaps shape up but the base is small.
When it comes to the chart of SAP (SAP) the breakdown is not pretty at all. I am just unsure if I should use the blue or the black line to measure the target. If we use the blue line, the target is in the 180-190 area and it’s almost there. If we use the black line, the target is around 160. For now I am inclined to think we see a bounce from 180-190 but that’s it. There will need to be base building and that takes a long time.
In recent months I have warmed up to some of the staples like Clorox, Colgate and Pepsi and even Kimberly Clark seemed to be trying to hold. At year end I was asked about ConAgra and since I loved the big dividend, I thought that was okay to buy. But I have mostly (ex-Pepsi and CAG) shied away from the food stocks.
Now I have been asked about General Mills (GIS) and Campbell’s Soup (CPB) . I think they can both bounce. I do not think they have any sort of base built yet that feels solid. CPB looks to me like it can get to 29 but then it will run smack into a lot of overhead.
GIS looks more interesting only because that flush in early January might have been a flush. But it has to get up and over that downtrend line before I am a firm believer. Once over it, the process of building a base will be arduous but possible.
Dutch Bros (BROS) has gone nowhere for a year. I’d venture to say that if it comes down to that lower line (54-ish) it should bounce but aside from that it just seems more meandering than anything else. I’ll call it trapped in a wide range so maybe it is building a base. About a month ago I liked Starbucks and it had a nice run but popped and dropped on earnings so perhaps I am biased against coffee now!
