Did the Market Rally on FOMO?
Stocks were up, but there was no panic. What does this mean for the rest of the week?
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The Market
The question of the day: Was that it?
There were some signs that say yes and some that say nope.
I did not see or feel panic. Oh, I know some folks are saying how bearish folks were early this morning. That might have been the case—the bearishness is not in doubt to me. In fact, I think there is a lot of bearishness; just look at the survey data. The issue is, was there panic?
There was, once again, no 90% downside volume. I know I’m becoming annoying as I harp away, but panics clean it out; jumping in and buying the big down Monday opening has more of a sense that folks are more scared of missing a rally than they are of more downside.
But let’s talk statistics. Nasdaq’s new lows expanded. Only by a smidge, but expand they did, to just over 700. The prior reading was 688, so, no, there was no positive divergence.
The NYSE did see fewer new lows (276 today vs. 289 in mid-March) so we did see a positive divergence there.
The QQQs QQQ traded just over 50 million shares, so not much panic on that score. That number was 75 million in mid-March. Oh, I know some will say lesser volume is a positive. I say lesser volume means no panic, just less selling (less selling is good).
And the QQQs bounced right off the line that is very obvious (the S&P did as well). Probably another reason there was no panic.
But the Transports did not make a lower low and they have been a weak link. The Utes powered upward. And here’s a really big change (to me): the ISE call/put ratio was .99. Okay, I know, there isn’t a big difference between .99 and 1.0 but this was the first reading under 1.0 since August’s low.
Consider that the market has been sliding for six weeks now (most stocks much longer than that) and today was the first time folks felt the need to hedge like that. Or at least not even gamble with calls.
The ISE Equity call/put ratio wasn’t that low, but it has been trending lower for weeks and the ten-day moving average is approaching levels seen in August and September (and even last April). This is the first reading that is not a survey that shows a move to recent lows.
I would still love to see panic this week, as I think it would lead to a rally that lasts longer than a few days.
New Ideas
GLD has broken out of a (funky) trend line. But I need to report that the DSI is once again 88. Last time it was 88, GLD backed off and rallied again (bullish). If the DSI goes over 90, I wouldn’t say backing off is bullish. I would say it’s time to sell.
Today’s Indicator
The 30-day moving average of the advance/decline line is a little bit oversold.
Q&A/Reader’s Feedback
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I would have preferred Snowflake SNOW to have filled the gap at 135 before bouncing. Now, all it has done is make a lower low. That having been said, it ought to rally. I’d be a seller if it gets to that downtrend line (around 155-ish).
I’m not sure there is much positive to hang your hat on when it comes to the chart of Jack in the Box JACK. The only note is that it is oversold down here. There is resistance in the 30-32 area now so if I owned it that’s where I’d be a seller.
When we last looked at Target TGT I said it had a measured target around 100 and it tagged that area today. There is no base to speak of, but if you wanted to take a stab, this is the area. I would think for the time being you should treat it as a trade only.
If Microsoft MSFT can rally back to 390-400, it would be a good place to take some profits on a trading basis. Longer term (months out in time) it should measure to around 320-ish. Doubtful it would do so on this leg down, though.
Oracle ORCL has a long-term measured target near those spring 2024 levels. In the near term, it is oversold enough to rally. I just feel as though there are better names to play for a rally.
The good news for fans of Vertiv VRT is there is a measured target around 65, so it ought to bounce. If it can get to 90, I would view it as a gift.
