Hurray for the Others and for the Highs
I've got some stats to share as the 'hot' ones sit it out and the Transports rock. Plus, a tradeable Staples and should you catch a falling knife in Oracle?
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The Market
Two cheers for the 493 because Wednesday certainly wasn’t about the mega-caps. So many of the mega-caps were red, but more than that, so many of what I would term 2025’s hot stocks were lethargic on Wednesday.
Yet, look at the increase in stocks making new highs on the NYSE. That is the most since early October. I applaud that.
Let me share some statistics with you. We’ll begin with volume. Upside volume on the NYSE was a very underwhelming 67%. Worse than that the Nasdaq’s was 56%. That’s what I mean when I say so many of this year’s winners pretty much sat it out Wednesday. I’m OK with that because I always like it when the 493 get the love, but keep in mind most are invested in the winners, the Mag 7-type names.
Sticking with some stats, the McClellan Summation Index increased its cushion to -1,300 (advancers minus decliners on the NYSE). That means the indicator is still rising. Bonds were flat on Wednesday and the Utes can’t seem to find a friend.
But the Transports — which still have only attracted a modicum of excitement as best I can tell — were up nearly 3%. They are now about 250 points from the old high so there might be some resistance up there.
Sentiment wise, the Investors Intelligence bulls increased to 53% while the bears are down to 17%. That puts the ratio at just over 3.1. Keep in mind that is the reading through last Friday so next week’s numbers could push that ratio back in the 4.0 range. If it did that I would call it giddy once again.
The DSI on the VIX is now 14. That’s yellow flag area. The Nasdaq’s DSI is 80 and the S&P is neutral at 74. Again, a DSI of single digits in the VIX and over 85 for the two indexes is bearish. We’ll watch for that should it happen.
It looks like Thursday could see the index movers drag the index down a bit.
New Ideas
A week or two ago I was asked about the chart of Colgate-Palmolive (CL) and I liked that it had finally crossed the downtrend line, but it needed more work. It has come back to test the line and form a small head-and-shoulders bottom. Several of you have inquired about the Staples so I am doing my best to come up with some that might be tradeable.
Several of you seem to want to catch a falling knife in Oracle (ORCL) . My view has always been that spike lows tend not to break the first time they are tested. Therefore, in that $180-190 area I would expect a bounce. Could it be from a higher level? Yes, my point is that I am inclined to think it bounces within a matter of days. But just a bounce.
Today’s Indicator
The Volume Indicator — don’t laugh — is at 50%. It truly doesn’t budge. But look at that upside volume number I posted above: that’s why.
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 was asked to update my view on PepsiCo (PEP) and if the potential head-and-shoulders bottom is still in place. The answer is yes. Keep in mind I still think it will take a long time to play out. I would prefer it doesn’t break under $140, but the pattern is still present. Timing is elusive though.
TC Energy (TRP) had better hold this $53 area because if it breaks then support is back at $51 and the chart will look as if there is a ton of resistance overhead. So I would use that as a stop.
I have been bullish on Exxon Mobil (XOM) for months now and it hasn’t done me any good since the stock has basically gone nowhere. If it can ever get going my target is in the $130s.
Starz Entertainment (STRZ) has some resistance in this $12-13 area. I realize all of these entertainment stocks have gotten a boost lately and it’s the year-end gamble at work as well. But if the stock cannot get over $13 then there is a lot more work to be done.
I was asked where I might buy iShares China Large-Cap (FXI) , an ETF to be long China. I don’t have a strong sense on it but I do know I don’t want to see it break under $38. I am positive on Alibaba (BABA) , which has been written up a few times lately with a positive eye. Yet even that can’t get going!
AutoZone (AZO) is breaking down from a top of sorts but it is also getting short-term oversold. I think it is too soon to do more than bottom-fish for a bounce. If the bounce cannot get back up over $3,500 I’d be a seller.
