Beware of the Air Pockets
It's a stock picker's market, but those stock pickers had better pick carefully!
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The Market
The stock-picking market is even getting picky among the mega caps. I mean, are Meta and Amazon allowed to be down on a day the S&P and Nasdaq are up? Has it gotten to the point where NVDA rallying even sucks the air out of them?
But hey, breadth today, while terrible, was not nearly as terrible as it was Friday. By that I mean the S&P was up roughly the same amount, and breadth today was flat, while Friday it was negative by about 860 issues.
Yet once again, the indicators do not change. Everything sort of sits there while some stocks move with big air pockets. One of the air pockets today was Colgate CL, a chart I highlighted on the negative side about a week or so ago. It plunged.
At some point in the coming months, these staples stocks will be good buys for more than a trade, just because they are down so much and will have decent dividends. Right now, I would say that there is a measured target around 76-78, and you can see there is a line that comes in there, so if you want to play for an oversold bounce, there you go.
When it comes to these down-and-out stocks, I tend to love them, but not as we get into year-end. There are many times when the tax loss selling doesn’t matter, and then there are times where the selling can be so relentless as to not be worth the bottom fishing. That’s why I’d rather wait for them to set up, or at least get closer in time toward year end.
Wishing all those who observe the Jewish New Year, a happy and healthy and successful year.
New Ideas
Let me do some follow-ups tonight.
Progressive PGR, which I liked about a month ago, has gone nowhere. But it keeps bouncing off this 240-ish area. If it doesn’t start moving soon, it is going to become one of those tax-loss selling candidates.
Someone asked about Kenvue KVUE last week, and I noted I have a view that spike lows tend to hold on the first strip down there. Obviously, the news is bad for it today, but if you are looking for a potential trade and don’t mind catching a falling knife, the 16-ish area should give a bounce.
Starbucks SBUX has finally started to bounce. It has resistance all the way up, but get it over that downtrend line and it gets much more interesting.
I am still interested in Alcoa AA, which is working this channel rather well since June.
I think it was close to a year ago that I recommended Uber UBER. It has finally tagged 100, which was my measured target. There is a secondary target around 107-109. I do not want to see the stock back below 90.
Today’s Indicator
The 30-day moving average of the advance/decline line is overbought.
Q&A/Reader’s Feedback
You will notice a theme in some of these requested names: they are okay, but not exciting. It is difficult to get excited when stocks do not correct and set up patterns.
Qualcomm QCOM ought to make it to 175 after all the swing from 160 to 145 in August measures there, and we can see the resistance on the chart there. After that, I’d have to see how it looks once it gets up there.
BigBear.ai Holdings BBAI sounds like a made-up name to me, like Long Island Iced Tea Blockchain (that was a real name of a company once). That having been said, I would use a stop under 6 and look for resistance around 7.5-8.
First Solar FSLR has resistance up here around 220, but as long as it stays over the uptrend line (around 200 currently) it is okay.
I keep thinking Bristol Myers BMY is working on a base, but it keeps doing more work than anything else. Once again, my concern will be what it does as we head into year-end. Do we get tax loss selling?
I had liked United Parcel Service UPS back in April, thinking it would fill that gap down from earlier in the month. It took three months to do it, and then instead of pulling back and rallying again, it died. Now it is trying once again to hold. It looks oversold enough to rally, but once again, here is a candidate for tax loss selling as we get further into year-end, so I’d call it just a trade for now.
