The Mega-Caps Rallied, But It's Those 493 That Need to Correct
There were interesting moves under the surface today, but we're not out of the woods yet.
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The Market
There were a lot of interesting moves under the surface of the market today. Let me point out that a few mega-cap tech stocks actually rallied today. Don’t get excited, it was just a few!!
Seriously, Microsoft lifted as did Meta. And while the Semis are on a non-stop move higher, even they started to look a bit tired today with the SOX closing near the low of the day. That is the third time in the last week it has done so.
I am not bearish on the semis. As I have said, I need to see them get overbought for that, but the fact that there has been quite a bit of closing on the low of the day tells me they are tired.
Also, the banks have rallied but not well. I tend to use the Bank Index, which is flat on the year so far, despite being the one group everyone agreed they loved this year. Notice it closed on the low of the day
I know the metals are in a world of their own, but look at Freeport McMoRan’s (FCX) action today: also closing on the low of the day. It has done nothing wrong (reminder, I was bullish on this chart in the 38-40 area), but it has had one heckuva run and is in need of some digestion.
Sentiment hasn’t changed much. The AAII folks backed off their bullishness a bit, as did the NAAIM folks, but nothing to write home about.
I just think the 493 are overbought and need to correct.
New Ideas
I was asked if I have a target on Alibaba (BABA) , which has finally decided to join the party. I do not. Initially, there is resistance here. I would like to see the chart mill around or pull back a bit before it gets through that line. The next target would be up in that 190-195 area.
You know, if I’m digging into a stock like American Superconductor (AMSC) , it’s probably late in this rally, but it is developing a tiny little base. A stop under 30 feels far away, though.
Today’s Indicator
The ten-day moving average of the put/call ratio has fallen quite a bit this week and now resides at .84, which is just above where it was prior to the mid-December pullback.
Q&A/Reader’s Feedback
Eaton (ETN) is one of the types of stocks that should have rallied much better by now, after all, it is a 493. There is an unfulfilled measured target on the downside around 290, but I think for the time being the chart looks trapped between 310 and 350. If it cracks the lower end, then the next stop is 290-ish, and the upper end, the resistance is in that 370-380 area.
ASML (ASML) has earnings next week, and while the stock hasn’t done a thing wrong, it is very hard for me to want to buy a stock that is up 30% since the start of the year. Is it vulnerable to profit-taking? Yes. But that’s the worst I can say about it.
It looks like someone did not like GE Aerospace’s earnings (GE) . If it can hold 290-ish, then the stock is still okay, and this is just a correction along the way. If it breaks 280, that would be a lower low and therefore not good. So 280-290 needs to hold.
As I noted the other day, TLT did not break the way the actual yield did. So, for now, that’s my stop level: under 86.50-ish.
Cleveland Cliffs (CLF) is stretched on the upside and has that spike high at 16.50 to contend with, but that's the worst I can say about it. It did not trade particularly well today. I’d love to see how it does on a trip back to that uptrend line. If it holds, great.
Peabody Energy (BTU) is over-extended and therefore vulnerable (see today’s action) to a bout of profit taking and pullbacks. If it pulls back to 36 and can hold there, then the stock is fine, but it hit a first measured target today at 39, so I think it needs some sideways action or a pullback.
