The Mega Caps Take Over In Advance of Key Earnings This Week
Traders ignore some of the key indicators we've been watching, and pile into the big names.
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The Market
And just like that, we’re back to the 493 sitting it out while the Mega Caps take over.
Is the market ignoring the Dollar/Yen? Maybe.
Is the market ignoring the asset managers? Maybe.
Maybe that’s why the Russell came down on Friday and again today. In fact, do you realize these are the first consecutive red days for the Russell since the calendar turned to 2026?
Here’s what I saw today: breadth was flat (the 493), but over on Nasdaq, where the Mega Caps stole the day, net volume was negative, as it was on Friday.
Quite frankly, I don’t think today changed anything in terms of the indicators (we’re still overbought). The only thing it did was make the cushion for the McClellan Summation Index to -300 (that’s advancers minus decliners on the NYSE). So if we do get a harsh down day, the Summation Index could stop going up.
What else did I see today? I saw wild moves in the metals. The DSI for Silver, much to my frustration, is still at 88. Does it look like a blow off? Sure, but I said that weeks ago.
What I did notice is that a silver stock like Hecla (HL) had quite a reversal today.
MP Materials (MP) also had a reversal today, although it has not been nearly as hot as the silver stocks have.
And then there is my old friend Alcoa (AA) . I have stated recently that this chart is in desperate need of a correction. It has yet to properly correct, but the action since the first week of January says to me it is likely coming.
As for the Mag 7 names. Microsoft, Meta, and Apple have now run or are running right into earnings midweek. I’d love to see them pull back before earnings to see if buyers show up again.
New Ideas
Once again, I have been asked if I still think Pfizer (PFE) will break out, and the answer is yes. The first step is getting over that top line, which should then stop in that 26.50 area (high from early October), and then it should pull back, etc.
Today’s Indicator
The 30-day moving average of the advance/decline line is overbought.
Q&A/Reader’s Feedback
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Annaly (NLY) is not my kind of chart because I like them when they are down and out and not up already. But the stock hasn’t done a thing wrong. Could it pull back to the line? Sure? I would get concerned if the line broke.
Palladyne AI (PDYN) could be attempting to base, but for the time being, all I see is a chart that is swinging up and down and recently made a lower low. If the stock can rally back up over 7.50, then I would start to think, okay, it’s going to try and build a base because at least it will have gotten back into that 7-10 area. If it holds this 6-ish area, I’d want to take another look.
AGNC (AGNC) is over-extended, but that is the worst I can say about it. As long as the uptrend line remains intact, then it’s a stock in an uptrend.
Advanced Micro Devices (AMD) reached resistance and is now pulling back. I would expect it to bounce off that line on its first trip down. If it can’t hold it, then I’d have to rethink my view. Call that level 230-240.
Novo Nordisk (NVO) is getting into some resistance in this 65-68 area, but it is still a chart that should keep improving over time. I can’t chase it up here because I prefer a pattern to set up, but the chart remains fine.
Sprouts Farmers Market (SFM) is not a pretty chart, but if—this is a big if—it can map out over the next few months, as I have drawn in blue, it finally improves it.
