Boeing Soars Along With the Index Leaders
It was an index-chasing day, but perhaps Boeing thought it was a tech stock.
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The Market
Today was very much a mostly index-chasing day. Breadth was positive, but nowhere near the types of positives we’ve been seeing.
For example, the S&P was up 42, and net breadth was +600. Compare that to last Thursday when the S&P was up 32 on the day and net breadth was +900. It is not bearish, just something to put on our radar. The McClellan Summation Index is still rising (chart shown below).
But if we go to our checklist from the other day, bonds are a problem. They just can’t rally. The best news I have for you is that today, everyone seemed to notice, which can often precede a bounce.
The Utes are now red five straight days and six of the last seven. They need not outperform (I have not been a fan of them for a while, mostly because they just seemed sideways), but they should not collapse. They are now down four percent in a week after enjoying a false breakout. Support is good at 990. I don’t expect they will get there in a straight line.
The new highs expanded this week, but they are seriously lagging. Again, that’s not dire, but when breadth is heading upward, new highs ought to follow suit, and they are not. The Nasdaq Hi-Lo Indicator barely ticked up today.
The SOX continues to impress. I thought 44-4600 was all it could do, and it just keeps gapping upward and blowing through resistance, although it is getting overbought.
Unfortunately, as of this writing, the DSI has not yet been updated, so I cannot update you on the data. I figure it is unlikely the two indexes (Nasdaq and the S&P) are over 85 yet. At best, maybe they are in the low 80s, and the VIX is probably still a high teenager.
I would like to see the market pull back for a day or two and rally again. My sense is sentiment is getting quite complacent, where it was not a few days ago.
New Ideas
For the person who asked last week, Boeing BA did finally break out (how long have we waited for this?!). That base measures, longer term, to the 250 area. It is over-extended in the short term. A pullback to the 190 area would be a good spot to buy.
Today’s Indicator
The McClellan Summation Index is still rising.
Q&A/Reader’s Feedback
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Back in mid-April, I recommended Home Depot HD, and it disappointingly sat there for the remainder of the month. In fact, it didn’t do much until Monday when it finally popped right to resistance. I wouldn’t chase it here, but on a pullback to fill that gap near 370, I would look at it again for a trade. The issue, though, is that earnings are a week from today, so you are gambling on earnings, something I prefer not to do.
SoundHound SOUN is trying to form a base, but there is resistance all the way up. If it can get through 12, it should fill the gap just over 13, but then runs into resistance at 14. You probably need a lot of patience with it.
United Therapeutics UTHR is tempting, but it trades quite thinly. There is a lot of resistance at 325. I would use a stop under 300.
Constellation Energy CEG crossed the downtrend line, so as long as it stays over 260, it will try to eat its way through the resistance. I just can’t chase a stock that has gone up 30% in a bit more than a week.
When Alphabet GOOGL reported earnings in late April and closed on the low of the day, I said I would buy it around 160. It popped from the 160 area, but the pop was pathetic. It then dropped and is struggling to get back over 160. It should be over that upper line by now, and it isn’t. A break under 150 and I’d call it quits on this stock.
When I recommended Coinbase COIN last week, I did not realize they had not yet reported earnings. I also had not idea they would be added to the S&P. Someone probably knew which is why the stock didn’t pullback much on the earnings. In any event, the massive move up today takes it right to resistance and the measured target. Chasing stocks that get put into the S&P, and ones that are up 20% on the day, are not my cup of tea. I’d take something off the table.
