If the Rally is to Continue, We Need More than Tech and Meme Stocks to Drive It
While the giddiness has been tempered, participation needs to broaden.
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The Market
Well, at least the giddiness we saw late last week has been tempered. Aside from that, it still seems to me that we are having an overbought pullback, and when it is done, we should rally again. If the rally cannot see increased new highs, that is problematic.
The new highs do continue to lag. If they do not improve by the time we are back to an intermediate-term overbought reading or the indicators roll back over, I would consider that a negative.
In the meantime, the Bank Index and Industrials cannot join the party. They keep trying, and they keep failing. That is in keeping with the stocks making new highs. We need to expand the new highs beyond tech and meme stocks.
And yes, the Transports are flying, but this move in (CAR) is out of control, and I do not view it as a positive. That’s 2021 Meme Stock Mania type stuff. Nor do I view the move in the Utes as a positive. That is more worrisome.
But the McClellan Summation Index is still rising (chart shown below). If that rolls over I will get more concerned. The sentiment over the last two days has backed off considerably. For example, the DSI for Nasdaq was 82 Friday, and today it is back at 70.
I suspect the SOX sees a down day before this pullback is done.
New Ideas
(IGV) finally made it to the March high. I would like to see it pull back and rally again. Because it would be a rally from a pullback that would tell us a lot more about where it stands: was this all short covering, or will there be buying? I lean neutral on the group now.
Today’s Indicator
The McClellan Summation Index is discussed above. It would need a net differential of -1500 advancers minus decliners on the NYSE to halt the rise.
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I should reiterate that I do think Silver had a bubble that burst back in January, which ought to mean that Hecla (HL) isn’t going to be a great chart. You can see how it has come down in layers. That having been said, I suspect if it gets into that 17-18 area, it will bounce again just because of that uptrend line. If it breaks 16, I am wrong.
If Accenture (ACN) can map out something akin to what I’ve drawn in blue, then I might warm up to it. But right here and now, all I see is a stock desperately trying to form a bottom and yet hasn’t been able to make a higher high. The first sign that the buyers are interested would be a rally over 200 because that would be the first minor higher high in 2026.
Abbott Labs (ABT) has not had a rally attempt in nearly two months, so it is oversold, but that is the best I can say about it. The stock is in a downtrend, and it’s hard to even want to bottom fish in it.
