Right Now, It's the Retailers that Bear Watching
Despite Oracle's huge gain, the stock market did not follow. So, let's check in on the health of the consumer.
You're reading 0 of 1 free page.
Register to read more or Unlock Pro — 50% Off Ends Soon
The Market
I was so hopeful that today would be the day the indicators moved. I even spent the morning doing some calculations and what-ifs and looking forward. All to no avail because there was very little movement in the indicators.
One change is that the SOX jumped up to a new high. It hasn’t changed the fact that relative to the Nasdaq, it is still well below its prior highs, but since we now have group rotation among even the Mag 7 stocks, it’s worth noting.
I realize Oracle isn’t in the QQQs, but if I told you last night this stock would be up 30% or 40% on the day, and the QQQs would close the day flat, you’d be shocked. I know I would have been.
Away from that, the Utes rallied! In fact, they had their best rally in a month. That’s a plus.
No one seemed to note that energy rallied. Will we finally get that move up in Schlumberger I have been waiting for?
Away from all of that, the other day I noted that the restaurant stocks have been quite weak. We looked at Chipotle CMG which couldn’t even stop at 40 for a bounce. We looked at Cheesecake CAKE, which broke down under 60. But I also noted that Starbucks has been terrible.
Retailers, which all reported the consumer is in good shape in the last week, need to be watched. You will see I was asked about Costco below. If it breaks that uptrend line, that’s a problem. Walmart has not been able to make a new high.
I have had very little luck shorting stocks in years (although I did have CAKE a few days ago) because it seems as soon as they are down, they rally, but let me show you some charts that need to be focused on.
Starbucks.
McDonalds.
Away from restaurants is another consumer-facing name: Disney DIS. I had been waiting for DIS to come back down to 112 (a month ago, I said that is what I wanted), but now it looks rather than a retest of that line, like it could be rolling over. Again, these shorts tend not to work well, but this and the others bear watching for the health of the consumer.
Finally Marriott.
Not directly related to the consumer, JB Hunt JBHT, the trucking company, is also at a critical level.
New Ideas
We have had a nice run in Sinclair DINO, and while I don’t think it is done, I do think it is vulnerable to a pullback, so if you are trading it, it has reached a short-term measured target.
Today’s Indicator
The Volume Indicator moved! It went from 50 to 51%. But it remains stuck here.
Q&A/Reader’s Feedback
That top that Oneok OKE broke down from measures to 64-67ish. It is, however, short-term oversold. It ought to bounce and come back down. My guess is there could be some tax loss selling in this name as we head into year-end. Let ‘s say a bounce toward 78- 80-ish and then another trip down. Perhaps such a trip makes it all the way to the mid-60s or just gives us a W pattern. Notice that the blue line on the weekly chart is support and is in that mid-60s range, so if it gets down there, it would definitely be worth looking at.
When I said United Health UNH was oversold in late July, I did not imagine the stock would run a hundred bucks, but that’s what it has done. It ought to fill that gap around 375, although it has already had quite a run.
Bloom Energy BE measured to 45, so no matter if we look at the daily or the weekly, it has hit its target. The two things to be careful about now are that it gaps down and leaves today’s action as an island, or it breaks that short-term uptrend line. Both would be negative.
Unity Software U has run into some weekly resistance and hit a measured target (43-45). As a trader, taking a few profits would always be my reaction. If you want to give it some room to correct and still be okay, then use that uptrend line as your guide. If you are looking to buy it, then again, the uptrend line is your guide. Buy when it is near the line and then use the line as your stop, giving you a much better risk/reward.
Costco COST has gone nowhere for a year now, but I did recommend it back in late July when it was tagging this uptrend line. As long as this line stays intact, I think the stock is okay.
I think I was asked about Waste Management WM a few months ago, and I was not a fan. Based on what has happened, I am still not a fan. If the stock can get down to that 200 area, I think I would have a look at it. In the near term, 212 is short-term support.
Helene welcomes your questions about Top Stocks and her charting strategy and techniques. Please send an email directly to Helene with your questions. However, please remember that TheStreet.com Top Stocks is not intended to provide personalized investment advice. Email Helene here.
