The Market Was Down, But Selling Was Light
What do the indicators suggest is next?
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The Market
Well, we got a down day, but there wasn’t much selling. Oh, sure, you can pick on this stock or that stock that gave us a lot, but mostly, if they gave up a lot, it was what they gained on Friday. In other words, the charts did not change.
Neither did the indicators. Sure, it was the worst day for breadth in nearly a month, but it wasn’t enough to take the McClellan Summation Index down. That would require another day where breadth is a net negative 800 (advancers minus decliners). To put that in perspective, we came in with that number at -2800, so the poor breadth took it down a lot, but not enough to change the indicator. Not yet.
We are still overbought, but the market, especially in the last week or so, when breadth finally got cooking, has been strong enough that it will be difficult to get much selling in the early going. Will we eventually get more selling? Probably, but I think at first it is grudging.
The big change, at least for me, was the US Dollar. It rallied. In fact, if you squint really hard, you can see it is at a one-week high. But nothing much matters unless/until the Dollar Index gets over 98. Getting over 98 would cross that line and push the buck over those two prior lows, the one from April and mid-June. To me, that would be a real change.
Bonds also got clocked, but I still think TLT is in a big sideways for now. Interest rates are basically where they were three years ago.
It would not surprise me at all if the market rallied tomorrow, but I still think we need sentiment to shift and the market to get back to an oversold condition.
New Ideas
I was asked to follow up on C3.ai AI, a stock I liked a few months ago. I still have a target in that 28-30 area. I would prefer it does not trade back under 24-ish.
I was also asked to update my view on GLD. You may recall, similar to the S&P and Nasdaq. The DSI for Gold never got over 90 but rather tagged 88 (the upper 80s). It has been in a sideways pattern for about three months now. If GLD breaks that 300 area, I would consider this a top and therefore would turn negative on GLD. Right now, it’s just digesting that big run.
Today’s Indicator
The 30-day moving average of the advance/decline line is getting back to an overbought condition again.
Q&A/Reader’s Feedback
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Micron MU filled that gap down from last July, and now, even if it rallies later this week, it looks to me as if it ought to pull back toward that 110 support area in the coming weeks.
SoFi SOFI is a little bit over-extended. It’s got some pretty good support at 17-18, so I’d be more concerned if it broke that 17 area.
Viking Therapeutics VKTX looks more like dead money than anything else, but as long as it doesn’t break 25, it gets the benefit of the doubt to cross over 30, which is the first big resistance area.
Dell DELL should have filled that gap at 140 by now, and it hasn’t. For now, I would get concerned if it breaks under 115 on this pullback.
I have been waiting for Alphabet GOOGL to get into that 180-185 area, and it has only poked its head in there and retreated twice. I’m inclined to take some profits on a part of the position rather than live with another (possible) trip down to 165.
Amazon AMZN is into resistance but hasn’t done much wrong (except not making a higher high). I’ll call it a hold as long as it doesn’t break under that little uptrend line.
