If Stocks Have a Chance to Rally, It'll Be on the Backs of the Tech
Not much changed in the market today. The tech stocks are still down, and the others are overbought. But will the market be able to move higher?
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The Market
In my view, Wednesday’s action resolved absolutely nothing in the market. I would, however, opt to harp away that the sentiment on tech stocks seems to have shifted markedly..
Here’s one example: the equity put/call ratio was .83 on Tuesday. That’s an awful lot of ‘bearishness’ for a market that closed up on the day. We have discussed the ISE equity call/put ratio, which has been under 2.0 for eleven straight days. Then we rallied on Wednesday, and it hopped right back over 2.0, so at least some folks were finally changing their tune.
The ten-day moving average of the total put/call ratio is now .94, which is fractionally higher than it was at the November low. I take that to mean the options players who have typically loved to buy calls on the big growth stocks really tailed off these last two weeks.
Then there is the Investors’ Intelligence Bull/Bear Ratio. It, too, has come down from that extreme reading over 4.0 a few weeks ago. It is now down enough for me to say folks are bearish, but the good news is the bulls are down to a smidge under 55% (they were 62% three weeks ago), so we’ve seen them pull in their horns.
Finally, take a look at the chart of the Dollar Index. That waterfall decline in January is what I believe helped propel the 493 upward. So if the buck rallies, I submit the 493, which are overbought, will need to back off.
To sum it up, I believe folks lean cautious on tech stocks, and the 493 are overbought, so if we’re going to rally, it’s probably in the tech stocks. I still would prefer a break of 6800, though.
New Ideas
Someone asked me recently if I thought Snowflake (SNOW) could rally back to the 190 area. As long as it doesn’t break 170, I’d give it a chance to do so.
Today’s Indicator
The Volume Indicator sits at 52%. Feels like it is always there lately!
Q&A/Reader’s Feedback
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Sometimes I look at a chart, and I do the math on where the measured target is, and I say to myself, "That can’t be right." Trade Desk (TTD) is one of those charts. Why? Because the top it broke down from in November measures to zero. Notice it hasn’t really had a panic move since this whole software breakdown occurred. It’s just been steadily down.
It is oversold. It also has earnings next week. If it doesn’t rally by the time earnings come around, then there is a chance that earnings pops the stock. Otherwise, it can rally, but there is no sign that this stock has much behind it unless it can gap up over 30.
Pure Cycle Technologies (PCT) bounced right off the line, so sure, we know that’s the stop area. I suspect PCT will need to do some work down here (you see the November/December plodding back and forth?) even if this turns out to be a low. Earnings are next week, which makes it a crap shoot, but if the stock can rock back and forth for a bit, I think it improves it.
I think it’s possible that Cal-Maine Foods (CALM) is trying to make a head and shoulders bottom. A solid move back under 80, and I’m probably wrong.
