Some Good News! But Even More Bad News.
Let's go to the indicators. Plus, Tesla is a cult stock, and Robinhood shares could fall much further.
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The Market
You want the good news first or the bad news first? Aw, heck, let’s start with good news.
The good news is that while I still see folks bottom fishing in software, there is more chatter that folks are shorting/selling it. There is more chatter that retail folks are not buying it. And no one even bothered to quote the RSI on it today.
It is the seventh straight down day and long-time readers know how I feel about streaks: they tend not to last. As I have indicated Nasdaq, using my Overbought/Oversold Oscillator looks set to get oversold by Friday. If I use the Nasdaq Momentum Indicator that looks like it ought to bottom early next week.
Also, the high volume the last two days tells us there has been panic out of it.
A few more tidbits of good news: breadth remains solid, the new highs have expanded (so have new lows but we’re talking good new here!) and the profitable small caps are outperforming the unprofitable ones this week.
Now for the bad news. The Investors Intelligence Bulls jumped to 62.3% which puts the bull to bear ratio solidly over 4.0 now. Typically the market is going to need to do something on the downside enough to get that back down. It’s not bullish.
And then there is the ratio of the SPY to Nasdaq. It keeps rising and typically that has been negative for stocks overall.
I think sometime in the next few days we will see Nasdaq get short-term oversold enough for a bounce/rally but I would not fall in love because unless/until sentiment changes the market remains vulnerable.
New Ideas
I have been a believer that Nike (NKE) would have a better 2026 than 2025. Thus far I have been wrong. But is that a potential head-and-shoulders bottom I see there?
Today’s Indicator
The Volume Indicator sits at 52%. It is not oversold.
Q&A/Reader’s Feedback
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Sometimes when I do the measured target calculation, I have to stop and say to myself, that sounds ridiculous. Is it possible that Robinhood (HOOD) really measures down to that blue line at 50? It is. That top is six months in the making. There is some decent support at that 65 area though and more importantly, today is the seventh straight red day. With the Nasdaq getting oversold at the end of this week I think the stock bounces and then comes down again after everyone has gotten comfortable again. If the stock can get all the way up to 95-100 I’d sell it there.
I had to use the weekly (3 year) chart on Constellation Software, which is a Canadian company. (CNSWF in the US, pink sheets). You can see it is trying to bounce off support. That giant top measures to 1200 so heck, it’s almost there (think of a 16-dollar stock going to 12 after having fallen from 40). That’s the best I can say right now: it’s oversold enough to bounce. If it can’t get over 2100 on this oversold rally, I’d start fretting.
Eli Lilly (LLY) got to its measured target and is now digesting the move these last few months. It tried to break down a few days ago but recaptured the line in a hurry. It feels to me as if the last few days sucked shorts in and now they have covered so the chart is still pretty neutral to me. If it can get over 1125 the next target would be around 1250.
Tesla (TSLA) has gone nowhere in years but it remains a cult stock. It’s got support in the 380-400 area. It looks to me as if it is forming a top but it’s still a little early in the process so unless/until 380 breaks, it’s just a chart going sideways.
Walmart (WMT) is a chart I liked months ago when it was around 95 and it hasn’t done a thing wrong since. There is a measured target around 130 so I suspect it is due for another rest. But that’s the worst I can say.
