Finding a Bear on TV Is Harder Than Finding One in the Woods
Analysts are turning bullish and talking about new all-time highs. Should they be?
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The Market
Well, we got a rally in the 493, so there’s that. And I tell you one thing: for the first time in a long time, it was hard to find a bear on TV. In fact, folks weren’t just bullish, they were all in on new highs and then some. That is a change.
Although that is anecdotal, the options ratios did not show excessive bullishness today. Tomorrow we’ll get our first glance at whether or not the survey folks have changed their minds.
Did the better breadth change any indicators? Not yet.
I will tell you what surprised me, though. Yesterday, I praised the number of stocks making new highs when Nasdaq made 191 new highs, which was an increase. Today, there were 177 new highs. That might be too little to fuss over, but new highs should be increasing, not milling about.
Breadth did okay, but not great. But I am willing to give it a try to make a higher high. Today, the S&P got back to the mid-May high, and breadth is still not there yet. With that short-term oversold condition, it gets a few more days to do so.
The breadth was good, but not enough to get the McClellan Summation Index to turn upward. That is another day of positive breadth that is needed to do that. The chart is below.
New Ideas
I am going to do some follow-ups again this evening.
We’ll start with Merck MRK, which I was asked about when I warmed up to the drug stocks a few weeks ago. I was not willing to commit to Merck, but as someone who likes to bottom-fish, it has finally felt better to me. If it can get over that spike around 81, it would be a step in the right direction. I think it can.
Back in March, I recommended Dollar General DG, and it finally filled the gap today. It has a lot of resistance in that 115-120 area, and it’s been a great ride. I wouldn’t argue against taking some profits here.
Today’s Indicator
The McClellan summation Index is still heading down. But it won’t take much to turn it back up.
Q&A/Reader’s Feedback
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As long as Adobe ADBE can stay over 400, it gets the chance to fill that gap near 440. If it trades back under 400, I’d get concerned, especially with all those gaps down this stock has a tendency toward in the last year.
It has been a long time since I have been asked about MercadoLibre MELI, so I was a bit surprised to see it at its high. There is a measured target of around 2700. In the very near term, I don’t have a strong view if it gets there now or if it needs some time/corrective action before it makes a run up there. A move under 2500 would imply the short-term is vulnerable.
Wayfair W has a lot of resistance to eat through, but as I said when asked back in April about it, the stock hit its downside target, so it needs to do some work to eat through the resistance. I wouldn’t be surprised if it crosses that line at 45, but there is still resistance overhead. I’ll call the stock a hold as long as it stays over 37.
Keep your eye on WSM and RH because they look different, and the three charts tend to trade similarly (although far from exact)
