Near All-Time-Highs, but It's Not All Puppies and Rainbows
Is the market ready for a pullback? Or will the rally continue?
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The Market
Statistically, I did not see much to change my view on the market today. I still think we’re overbought enough to chop or even—gasp!—pull back a few percent—before we see another rally attempt.
But I did see some negatives I would like to highlight from today’s action, lest you think it’s all puppies and rainbows out there.
The new highs continue to lag. I have said that is not a surprise because so many stocks were coming from so far down. But over on Nasdaq, there were 527 new highs Friday, and today there were only 285. That needs to be watched since 527 was still fewer than the prior peak reading of 560.
With the S&P at a new high, the NYSE only has 140 new highs (and just under 200 on Friday). If that carries on like that, it will become a problem. It’s just not enough new highs.
Then there are the Utes. I haven’t been a fan of them for a while, but they have been terrible of late. I keep thinking they will rally, but they haven’t. The Utes are down four percent in the last week. They really need to hold this 1150-ish area.
Then there is the garbage that is rallying. Avis (CAR) is up sixfold since the lows, and it was up over 20% just today. Is it a meme stock? Is it shorts running to cover? I don’t know, but that is not healthy action. And it caused the Transports to be up four percent today (yes, just today) on a day where oil rallied.
The DSI backed off to 75 for Nasdaq, so that can go on the back burner for now. The CBOE’s put/call ratio came in at .89 so that helps on the one-day look. However, the ten-day moving average of the put/call ratio is now .83. This low 80s area typically says ‘too bullish’.
Away from that, there was very little selling in the market today, and it looked like standard short-term overbought action to me.
New Ideas
I was asked if I have a target for Arm Holdings (ARM) , a chart I liked a few months ago. My initial target is obviously the old highs, which are fast approaching. If you wanted to take a little something off before earnings, I wouldn’t argue too loudly because it has had quite a run. But I have been thinking over the intermediate term, it really ought to break out. It’s just that up in this 180 area, it is over-extended, so it’s hard for me to chase. Earnings are out in early May.
Today’s Indicator
The 30-day moving average of the advance/decline line is no longer oversold, but it is not yet overbought.
Q&A/Reader’s Feedback
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Take-Two Interactive (TTWO) met its downside measured target when it got to 190. The issue is that there is a lot of resistance now, all the way up. In the very near term, it has spent the last few days chopping about, so it ought to rally again. If it can’t get back over 225, I’d start to fret.
Fair Isaac (FICO) might have had some capitulation last week, so if you want to speculate on that, then you’d buy this dip with a look at the next rally would cross that short-term downtrend line. Where’s the stop? A bit far away at under 975.
Moody’s (MCO) is trying to make a bottom, but it is very early, and there is a lot of resistance overhead. For now, I’ll call it a trading range in the 400-480 area. Note that earnings are out on Wednesday.
