The Handful Led the Heartache
Most stocks meandered Thursday. It was the usual culprits, the handful, that dropped like a rock.
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The Market
Many of you will laugh at me when I say this, but there was very little selling in the market today. Oh sure, the S&P lost more than one percent, but the same way the handful of hot stocks went up while everything else went down or sideways today was the handful falling while everything else went into meander mode.
The easiest way for me to explain this is by noting to you that the downside volume on the NYSE was 59%. And if you think Nasdaq had all the downside volume, that too saw very little because it was 61%.
Was there fear? Oh, maybe an ounce or two in the hot stocks. But the VIX didn’t come close to getting jumpy, and the put/call ratio did not even sniff at 1.0.
So, the indicators at this point don’t tell us much because we are not yet oversold. Thus, we should look at some lines and the uptrend line that has held the QQQs upward since May is exactly where they closed today. The QQQs had decent volume (just shy of 70 million shares), but that has been rather typical volume of late, so it does not stand out.
Since the S&P has a similar chart to the QQQs, you can see it too got right to the line.
I still have my eye on a short-term oversold condition developing next week, but now I’m thinking the only way we’ll get some fear is to break these lines.
New Ideas
Oracle (ORCL) filled the gap from the announcement with OpenAI. And it has support here. If you are willing to take on some risk, this is the spot it should bounce from. I will just say that I would prefer to get the market to a short-term oversold reading first, but my guess is this is the area it bounces from.
I re-recommended Valero (VLO) last week, and it’s done surprisingly well. I would use a stop under 172 because I wouldn’t want to give up gains.
I am asked about Pfizer (PFE) all the time, so I thought I would update that it looks okay here, but I don’t want to see it trade much under 23.50-24.
Today’s Indicator
The 21-day moving average of the ISE call/put ratio has finally rolled over again. (another sign folks are not fearful).
Q&A/Reader’s Feedback
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My inclination when I see a stock like Intuit (INTU) and the action today (bouncing off support is to like it. Here’s the caveat: lately, a lot of these types of stocks have reported earnings and gapped down, but as long as it stays over 640, it gets the benefit of the doubt.
Chewy (CHWY) is a stock in a downtrend. Remember how I’ve noted how many stocks are in downtrends or sideways since July? Here is Exhibit A. There is some support at 30-ish. I think it can rally, but I also think that blue line will be resistance for a while. It’s currently 35-ish.
PG&E (PCG) is my kind of chart. It’s building a base, and if it ever gets up and over 17.50, it would be quite a breakout. I would prefer if it doesn’t break that uptrend line.
The good news about LKQ (LKQ) is that it met its downside target when it hit 29. The bad news is that if 29 can’t hold, then the next target would be near 25. And that base is not very long relative to the top.
Gentherm (THRM) needs to hold on to this mid-30s area (33-35). If it can’t, then I would look for a move back down into the mid to low 20s.
I don’t love the reversal in Orthofix Medical (OFIX) from earlier this week. I’ll give it some room to hold on to that 14 area, but if it can’t hold 14, that would be a problem. Going sideways here would be okay. I just don’t want follow through from the reversal.
