It's Tech vs. The Others in the Competition for Your Money
We're still in an Either/Or market. Tech is oversold, while the others are overbought.
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The Market
Clearly, today was not as all-encompassing as Friday was, and I expect there will be more sorting out as the week moves forward. On Thursday, I said I thought the rally would be primarily in software/tech, and I still believe that to be the case.
There was just so much selling in tech-land last week that this group became the most oversold, while the 493 got a little overbought. It’s not as though the Either/Or Market has left us!
This brings us to the chart of the Dow. I know, it’s an ancient index that no one cares about anymore, except that there was some fussing late last week when it crossed over 50,000. The DJIA is actually a good proxy for the ‘493’ but in large cap form, so instead of using SML or even IWM or my favorite, MDY, the Dow shows us what the others are doing, but the big cap others.
It has been in a solid channel since last summer. I grant you the numbers are large and my lines are thick, but that upper line has kept a lid on rallies for more than six months now. I think it continues to do so. I’d call the top of that channel approximately 50,500-51,000.
The only other indicator that was of note from Monday was the ISE Equity call/put ratio was under 2.0 for the fifth straight day. I would love to see a red day on Tuesday, but I still think we’re not yet overbought, so we would see (tech) rally again.
New Ideas
A couple of weeks ago, I recommended Arm Holdings (ARM) . It promptly went down and came back, but in the end, it is still struggling to get through 125. I will give it about another week to get through. If it can’t, I will have to give up on it.
Today’s Indicator
The 30-day moving average of the advance/decline line hasn’t budged. I think we see it lift and come right back down again next week.
Q&A/Reader’s Feedback
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I would love to say that Best Buy (BBY) looks terrific here, but the stock seems caught in a giant trading range to me. So I would say you trade it, buying it in this mid-60s area and selling it in the upper 70s/low 80s. If it ever breaks out of either end of the range, we can talk about it, but for now, that’s what I see.
I liked Albermarle (ALB) last summer when the stock was still basing. Now that it has more than doubled since then, it’s hard for me to like it. I would need a new pattern to shape up or a move back down to that line (very far away). It may very well stop here and rally again, but I just don’t have a good handle on the risk/reward up here to buy it with confidence.
Shopify (SHOP) is bouncing off support from an oversold condition, like almost all the software stocks. It doesn’t have any serious resistance until that 135-140 area. I don’t know that it gets there in one fell swoop, but I think it makes its way close to there by the end of the next week or so.
Corning (GLW) has not done a thing wrong, but it is not my kind of chart. I would just call it a hold. It’s a little over-extended in the near term, but again, it hasn’t done a thing wrong.
Credo Technology (CRDO) will reach resistance in the 130-135 area. I would give it a chance to recapture it, but if it cannot do so within about a week, then I’d look to take my money and leave.
