Can Amazon Get Things 'Rolling' Like Meta?
Let's examine a good mood Monday and how that shapes the rest of the week, why I like what's happening with Meta, and look at Amazon, Jefferies and more.
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The Market
Monday seemed to put everyone in a good mood again. Well, except for the folks who own the quantum stocks. And of course Nvidia (NVDA) sat out the rally so everything else could.
Breadth had a good day. And the VIX fell even more. And we’re still a bit oversold short term.
Statistically speaking, though, very little changed. Except that NYSE volume contracted to the lowest level since the days just before the Labor Day weekend. Some want to blame that on AWS being down (therefore trading at places like Robinhood (HOOD) , they say, wasn’t happening). To that I say: I don’t rationalize an indicator.
We had low volume last Monday too. Was that because of the Bitcoin crash or because of the Columbus Day holiday? Who can say? Who can remember? It is simply worth noting.
And if that light volume causes a pullback on Tuesday then I wouldn’t be surprised. And then I would not be surprised if we rallied on Wednesday or Thursday. In other words, we will be back to an overbought reading at the end of the week so let’s see if the market can use that opportunity to rally more this week.
For me, I just like the fact that folks seem to be rolling into Meta (META) , which they have discarded for the last few months, and out of those parabolic low-quality names. As I have said for weeks now, those low-quality stocks need the air to come out of them. Because I continue to think the market is about group rotation.
New Ideas
I have been asked if I have a target on Alcoa (AA) . I do not. I view this chart similarly to the (XBI) chart we looked at months ago. There is a lot of resistance to eat through so dips that stay over that uptrend line are good. The next big resistance is coming up around $40.
The question is if I can see Amazon (AMZN) improving the way I see Meta improving. I can. In fact, the risk/reward is quite good here because as long as it stays over $210-ish the risk is manageable. I mean the chart looks very toppy, but if it holds, then it will look like it this was a giant digestion period.
Today’s Indicator
The 30-day moving average of the advance/decline line is not yet fully oversold.
Q&A/Reader’s Feedback
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You are going to see me say, quite a bit, with many of these high fliers, that I want a pattern to set up. Notice how long it has taken for a stock like Meta or Amazon to set up again (at least in my view they have set up!). That’s what I am talking about.
I recommended Circle Internet (CRCL) back in September near the low and it had a nice run. I keep trying to search for another time to buy it for a trade, but so far I can’t seem to find the right time or pattern. I don’t like that it broke that uptrend line. I’ll say this: If it can go sideways for a bit longer (a week or so) then I might feel more confident that the $120 area wants to hold and is solid enough to buy. A break of $120 would not be good.
IperionX (IPX) hasn’t done anything wrong yet (breaking the line would be a first step toward doing something wrong). The stock has reached a measured target so now I would want it to have a proper correction and set up a pattern again. Breaking that uptrend line isn’t dire, but I think it would mean a much deeper correction or a more prolonged sideways one.
It would be teeny tiny, but if Jefferies (JEF) can come back toward that $52 area it would look like the right shoulder of a head-and-shoulders bottom.
I do not have a strong view on iShares China Large-Cap (FXI) , an ETF to be long China stocks, right now. It’s in a funky channel, but I’m just not certain it’s going straight back to the top of the channel. As you might know I have now warmed up to Indian stocks (INDA) where a few months ago I liked the Chinese stocks. Group rotation is still alive.
iShares iBoxx $ High Yield Corporate Bond (HYG) , an ETF to be long high-yield bonds, broke the line and rebounded so it probably gets stuck near resistance (low $80s) on this trip back up. Again, I will sound like a broken record, but I prefer a pattern to shape up.
Bloom Energy (BE) is a parabolic stock so I will never like it up here. It has met its upside measured target. A pullback to the line would be good. A gap down under $100 would be bearish as it would leave the last week or so as an island overhead.
