Tech Stocks Made the Headlines, but We Should Focus on the Banks

The Market

The selling in today’s market in the technology space felt more like buyers stepped away than anyone was selling with any oomph. Witness that a mere 61% of the volume was on the downside. Yes, I know everyone is focused on tech, but as I said here last Wednesday or Thursday, it’s the banks we should focus on.

That is where the selling was today. We looked at JP Morgan  (JPM) , and I drew in this line, suggesting it ought to come down and tag it. It has. Now I’ve drawn in a blue line as well, which solidifies this 295 area as a must-hold area.

Just over a week ago, I said I thought  (KRE) , an ETF to be long the regional banks, should rally to 63. It couldn’t even get there (got to 62.50), and now it looks like a head and shoulders top if it breaks 58.

Let me also report that the number of stocks making new lows increased today, so the positive divergences from Friday (for Nasdaq) are now gone. The Nasdaq Hi-Lo is now at .31. It gets oversold (on an intermediate term basis) under .20.

Something else occurred today. The S&P closed under its 50-day moving average for the first time since the April lows. I don’t tend to fuss too much over that because, like broken trend lines, I like to give it a chance to recapture it.

Finally, the last ten Mondays have been green (with most of the Tuesdays red). Today broke that streak.

I think I wouldn’t be surprised if there is a rally tomorrow, but I’m going to need to see more to get excited about buying.

I will end by noting that Bitcoin, which now everyone is fussing over, is at a critical juncture (a very long-term uptrend line). I prefer when lines like that break and we get a panicky move, but I am more focused on the DSI, which is now 18. So, a break of that line would probably feel as if it is very late in the decline.

New Ideas

I was championing Pulte (PHM)  to hold, which it did for two weeks, and then it fell, so I am wrong. It’s got decent support in that 110 (gap fill) to 112 area.

Meta (META)  is a good example of the lack of selling we saw today. It mostly milled around.

Today’s Indicator

The 30-day moving average of the advance/decline line should bounce and then come back down again. Notice that’s what it has been doing for over a month now, just slowly grinding lower.

Q&A/Reader’s Feedback

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.

I was asked to look at the ratio of  (RSP) , the equal-weight S&P vs  (VOO) , which is basically  (SPY)  (market cap weight). It’s obvious that this has been a concentrated big-cap rally when we look at it this way, and even though that has changed in November, I see no change in trend. Unless/until the ratio crosses the blue line or builds a base, this seems to be where we are, except for short-term moves. I’d love to see it change, but I need the chart to tell me so.

You might recall I was asked about Palo Alto Networks (PANW)  about a month ago, just prior to the breakout, and I said I did not trust it, but I also noted I had not had a good call on PANW in July (thinking it would break out, and it cracked in a big way). Perhaps I am back in tune with the chart!

The blue line is now some short-term support, but any failure to get back up and over 210 puts holding at 210 into jeopardy.

CrowdStrike (CRWD)  is okay as long as it holds over 510, but it did reach its first target when it tagged 550 a week ago.

Marvel (MRVL)  rallied to resistance and is now pulling back. If 80 can’t hold, then I think 70 is next as support.

Super Micro Computer (SMCI)  should try and bounce from this area (lower line), but I’d be a seller at 40-ish if it can get there.

Cisco (CSCO)  hit its measured target when it gapped up. I’d get very concerned if it gaps back below 76, leaving an island up above.