Don't Overlook These Subtle Changes in the Market
Sometimes changes are not so obvious, but warrant monitoring. Let's check in on a widening bull bear spread, whether a bounce is imminent, the Others, and what could be next for Palantir.
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The Market
Well at least the QQQs, which have now clocked in five straight red days (the first time all year), bounced off that line. They also traded over 70 million shares, on a day the Nasdaq’s volume itself fell to the lowest level since August 4.
That reading of 75 million shares traded is the highest since the April lows. I do think we should bounce.
But did the indicators change? They did not.
Well okay, one indicator changed. The Investors Intelligence bears became teenagers this week. They fell to 18.9% (see above). The bulls are at 50.9% so the spread is the widest since the lows, but the ratio of bulls to bears is not yet over 3.0, which is a warning sign (over 4.0 is a sell).
Considering the indicators haven’t really changed and we’re not back to an oversold condition my guess is the bounce is short-lived. My guess is also that the group rotation stays alive. You might have noticed how as soon as the mega-cap tech names started to rally the "others" did some give-back. I guess we can safely say we’re back in an Either/Or Market.
Let me conclude by noting the changes that are subtle, but should be monitored. First, the aforementioned QQQs going for five straight red for the first time this year. There is also the fact that the S&P 500 has now been red for four straight. If Thursday turns up red then that would be the first time in 2025 it has done that. Subtle, but a change.
In that vein, notice how the last week has seen the S&P outperform the Nasdaq like it hasn’t done since the April low. It is my view that this recent pullback is different than the one we saw in late May and early August, just because this time folks are running to the "safety" of the S&P where they did not prior to this.
New Ideas
Johnson & Johnson JNJ has been terrific since I recommended it a few months ago. It is, however, quite over-extended and in my view it needs a pullback. If it can get down to the $170 area that would be a plus.
Today’s Indicator
The Volume Indicator is still at 50%. It hasn’t budged in weeks!
Q&A/Reader’s Feedback
Helene welcomes your questions about Top Stocks and her charting strategy and techniques. Please send an email directly to Helene with your questions. However, please remember that TheStreet.com Top Stocks is not intended to provide personalized investment advice. Email Helene here.
I don’t love it when a stock gaps down and can barely rally a few days later. Enovix ENVX had that happen but now it has come down to/near support, which means it ought to rally. If I had to guess, it rallies and then comes back down. This stock doesn’t have a history of making "V" bottoms but rather forming "Ws."
Palantir PLTR is not my kind of chart. I liked it when it was $20 and again when it was $80 but that’s because in both cases it had developed a pattern I could sink my teeth into. Now there is no pattern. There is support in this $130-140 area that should give it a bounce. The one thing I would be careful about is that the stock filled that gap (from early August) and did not immediately bounce, similar to the way it filled the early February gap and did not immediately bounce.
Since I like HF Sinclair DINO (the best ticker out there) I was asked about Valero Energy VLO. It’s not bad but it has more resistance all the way up. There is a long-term unfulfilled measured target near $180 but energy would have to come into favor big time for that to happen. Resistance here is around $145-150.
