SOX Hits Four Red Days. Here's What Could Lead to a Tradable Rally.
The SOX might bounce tomorrow, but that's not what I'm watching.
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The Market
So, we got the green day in Nasdaq. Will there be follow-through? That’s the big question. I’d rather there wasn’t because I would like it to mosey its way toward a better oversold condition.
But there were fewer stocks making new lows on Nasdaq today, which is the first positive divergence we’ve seen in at least a week. Chalk that up to the plus side for Nasdaq.
But I want to talk about the SOX. I haven’t spent much time discussing the semis lately because they have mostly done very little, having rallied, and in my estimation, they meandered up and are meandering down. Today was the fourth red day for the SOX. This index has not gone to five red days since May. So, I think it rallies tomorrow.
But let me say that as of right now, I think it would be better (in terms of getting a better rally) if it could come down and tag that uptrend line over the next week. Because if it got down there, it would be very oversold, oversold enough to have a decent tradable rally.
Aside from that, there wasn’t much else to write home about. Oil got smacked, but the DSI is still only 35, so it remains in the middle of nowhere. The DSI for Platinum is now 85, and Palladium is 83, so those are nearing frothy levels.
New Ideas
When I try and find a semi stock, the only one that comes to mind is NVDIA (NVDA) , only because it is still over that 165-170 area I have highlighted as support. If we can get it to tag that 170 area in the next few days—and not break—that would set it up for another rally.
As a follow-up to those who asked, Costco (COST) broke and snapped back to flat. If it can recapture that 870-ish area, I would probably view this as a false break.
Finally, for the person who asked about Twilio (TWLO) a week or so ago, it has now filled that gap, so if you are trading it, you might want to take a little off the table.
Today’s Indicator
The McClellan Summation Index stopped going up today. Remember, this tells us what the majority of stocks (RSP) are doing.
Q&A/Reader’s Feedback
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In the very near term, notice that the selling in Amazon (AMZN) dried up today. That’s what I mean when I say that the mega caps have seen the selling dry up a bit this week. The stock, with the exception of that pop-up in November, has been in a trading range for months. I don’t see that ending in the next few weeks. If it gets down to 215, bounces to only 225, and then comes down again, I would look for it to break down (under 215), but mostly it looks like a range-bound stock to me.
Whirlpool (WHR) has a lot of trouble in this 78-80 area. My inclination is that there is more work to be done here before it can overcome all that resistance overhead. Like another trip down to 70-72, that holds would at least flesh out the chart and let us know that the buyers who were there in November have returned. If it goes over 80 and can hold it I’d have another look at it, but right now I lean toward more work to be done.
Is Palo Alto Networks (PANW) finally making a higher low? I lean toward yes. Especially if it can hold that 180 area. So, a bounce is what I would expect from this 180-185 area. Longer term, the stock hasn’t gone anywhere in a year, and it couldn’t break out nor could it break down.
