Does a Rise in New Lows Signal a Change?
Most indicators have not changed. But new lows are on the rise. Is this the start of something?
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The Market
I feel like a broken record when I note that the indicators did not change. They don’t seem to change when we go up, and they don’t seem to change when we go down. But the group rotation continues!
There was one indicator that did change, though, and it is worth discussing. It’s the number of stocks making new lows on Nasdaq. It jumped---on an up day—to 148. That’s the most since that whack on the final day of July. I read the list, and nothing stood out, meaning sometimes you read the list and it’s filled with biotechs, or muni bond funds, or something like that, but this was just generally all over the place.
I would love to see a whack in the market, so if the Jobs report tomorrow or the PPI next week does it, great. The reason is because the 30-day moving average of the advance/decline line for Nasdaq is getting oversold. Typically, when it gets into that -300 area, the market bounces.
Now, I grant you it is highly unusual to see it this oversold at a market high (although Nasdaq hasn’t made a higher high yet). That’s why I would like to see a whack first.
You might have noticed that a lot of the recent hot Nasdaq stocks did quite poorly on Thursday, so again, if we see a whack in the next few days, it could set up an interesting market.
Of course, since we remain in a group rotation market, the setup will never arrive!
New Ideas
Packaging Corp of America PKG broke out a few weeks ago, came down, and retested the breakout. Now, if it can get up and over 220, that would be a good thing.
Today’s Indicator
The ten-day moving average of the put/call ratio is still rising.
Q&A/Reader’s Feedback
Corning GLW, which, if you don’t know, gets its ticker from the name it used to have, Corning Glassworks, has had quite a run. It hasn’t done a thing wrong, but it is at a measured target. If I owned it, I would probably take a few profits, but aside from that, it would need a lower high and a lower low to turn this into a negative chart.
I think I liked American Eagle Outfitters AEO the last time we looked at it because of that base. Now with the gap on earnings, it seems to finally be filling the gap down from last December (19-20), so I would not chase. If pullbacks can hold 17-ish in the next week or so, I might be willing to be a buyer again.
Brookfield Corp. (BN) has an unfulfilled target in the upper 70s, so as long as it doesn’t crack under 62 with any vigor, the last eight weeks look like a correction. I would get concerned if it cannot push through 68-69 on this next push upward.
I was asked to follow up on the ratio of SPY to Nasdaq, and I must report that it still has not crossed that downtrend line. Unless/until it does, then we can only watch for a trend change, because it is not with us yet.
