Is A Sloppy Oversold Rally Unusual?
Up, down, up, down. The market refuses to develop any kind of trend. Is the lack of panic to blame?
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The Market
Sloppy. That’s what this entire oversold rally has been. We haven’t even been able to get two consecutive down days, and we’ve had two consecutive up days only once. Is that unusual for an oversold condition? Yes.
But it is not that unusual when we consider that we never got any panic. We have plenty of bearishness but no real panic. I think that’s what makes for the sloppiness.
As for today’s statistics, there was once again nothing new to report. Breadth was okay but not great. The number of stocks making new lows has not expanded. About the only change is that the volume on the Nasdaq keeps shrinking.
Nasdaq’s volume today was 6.1 billion shares, which is the lowest volume since mid-December. I take that as the air coming out of all that speculation that we had seen built up since November.
We can even see the speculation easing out of the market—key word is easing, not panicking—in the 21-day moving average of the ISE equity call/put ratio. It is by no means low but look at the decline it has seen since the peak a few months ago.
Because it had gotten so extreme I would consider a move much further down to show me real bearishness here. Consider that all those surveys show readings dating back to the fall of 2022 but for this to get to a similar reading, it would have to fall to .90 (currently 1.34).
I consider the direction it is going a positive though. I’d bet if we got some panic in the market for a few days, this might fall back near 1.20 in a hurry.
We’re still not yet overbought, though, although each day that passes, the Oscillator nudges upward.
New Ideas
Someone has asked about Freeport McMoRan FCX several times of late, so I wanted to follow up. It is now at resistance and overbought. It is also up 18% since we got oversold. My guess is it’s due for a pullback now. Pulling back toward 38-ish and holding would be good. Much more than that, and we’d have to take another look.
Today’s Indicator
The ISE equity call/put ratio is discussed above in full, along with the chart.
Q&A/Reader’s Feedback
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Elastic NV ESTC has broken the uptrend line and yet it has also filled the gap from November. I am inclined to think this is a flag, so if it breaks 90, I would get out. If it can recapture 100, it has a chance at improving.
I have been inclined to be a buyer of Amazon AMZN for a few weeks now since it has good support down here, but I will say that if it cannot get up and over 200 in a hurry, the likelihood it breaks 190-ish goes up. Since there is so much support all the way down, it’s hard to say where it would go, but holding here is important for it.
I would like to be bullish on Linde LIN, but the stock feels more like it is in the middle of nowhere than trying to find buyers. It does tend to trade rather thinly, so I would take levels with a grain of salt. However, it would be best if it did not break that low around 446.
I have been positively inclined toward the XLE stocks for a while, but I still think Exxon XOM runs into trouble at that downtrend line. Those spikes in the low 120s are a problem as well. My guess is this run stops around 118-120, and then we can see what’s what.
Lyondell Bassell LYB had better hold 70, or it’s looking at a fresh breakdown with a measured target in the low 60s.
Huntsman HUN has gotten no traction at all in the year 2025. If it breaks that low around 15.50, then it’s a fresh leg down measuring near 12-ish.
Huntington Ingalls HII should spend the next few months pulling back into the 180-190 area to map out a base because, right now, it feels like this base is not long enough.
Marvel MRVL has decent support in this 60-70 area, but that gap down is not decent. Just look at that sideways action from April through September that gave way to the rise into January. So, while the stock is oversold down here now and ought to rally, it probably needs a lot of time to rebuild a base.
