Uptrend Lines May Be Holding, but a Realization Day Could Be Close at Hand
Do the people even know why they're selling? Let's discuss.
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The Market
Well, at least the action today got folks bearish, right? Not so fast.
Oh, the chatter certainly turned a bit cautious, but the put/call ratio was .81. I ask you to recall that it was 1.08 on Friday, the last time the indexes were down here.
I admit the chatter has definitely turned cautious, but I would like to see it in the statistics, too. The one thing I will say is that it feels as if we are heading—perhaps quickly—to a Realization Day.
As a reminder, to me, a Realization Day is the day folks all realize WHY they are selling. So, we ought to begin to hear all the rationalizations for why the favorite stocks are down: AI spending has gone too far, not enough profitable stocks going up, etc.
As for the statistics, well, most of the selling came in tech-land, which we reviewed comprehensively last night. So let me give you some good news, or at least what might be construed as such.
The number of stocks making new lows today was 283 for Nasdaq. Last Friday, when Nasdaq closed higher, the new lows were 388. New lows are measured on an intraday basis, and we have not yet traded under last Friday’s low. But at least on Thursday there was no increase.
While it feels as though the selling was intense on Nasdaq, only 63% of the volume was on the downside. The NYSE saw 79%.
For the most part, the selling was concentrated in what’s been up, not the down and outs that have been working since Tuesday.
The uptrend line continues to hold for both the (QQQ) and the S&P if I use the thick lines. The thin lines, not so much. Then there is the IWM. It has a flat line. Since September, this 236 area has held on each trip lower. If we break it, I think we’ll get some panic. If we break it, there would be a measured target around 225.
New Ideas
I was asked about (EWY) , an ETF to be long South Korean stocks, last week, and I drew in this line and said as long as it holds, it’s okay. I still feel that way, but last week we had not seen the failing rally we saw this week. If 90 breaks, it breaks the line and the prior low, which is not good.
Bristol Myers (BMY) has been terrific, but it needs a rest/pullback. I’d love it if the pullback only came to 48, but even if it does more than that, this continues to look like a base in the making. If it holds 48 for a few days, it’s bullish.
Another stock to keep an eye on is Palantir (PLTR) . A break of 170-72 measures into that 150 area.
Lastly, I know everyone is talking technology today, but JP Morgan (JPM) looks vulnerable to 300-ish.
Today’s Indicator
The ten-day moving average of the put/call ratio is rising. It’d be nice to see it over .90.
Q&A/Reader’s Feedback
ConocoPhillips ( (COP) ) looks like it is trapped in a range. I think it can rally, but there is too much resistance overhead for it to make meaningful progress right now. That blue line will be first resistance on a rally.
I had thought AT&T (T) would do a pattern as I have drawn in blue a few weeks ago, but the stock had other ideas and instead retested the low. Yet I still think it can map out like this. With all that resistance overhead, I would expect that 27-29 area to be tough to get through, though.
Alamo Gold (AGI) has some decent resistance here. It might ride the underside of that uptrend line, so it’s hard for me to get on board here. Also, the DSI for gold ran right back to 80 this week. Would need a pullback that holds to get me interested. If it falls toward 31 and holds, I might get interested.
Take-Two Interactive (TTWO) might try and fill that gap above, but lately, a lot of these gaps down have not done so. I’d get concerned if it breaks that uptrend line. My guess is the stock is heading down to the blue line in the coming weeks.
GAP (GAP) better hold that 23.50-34 area. If it can’t, this is a false breakout.
Pure Cycle Technologies (PCT) is, first of all, a stock that peaked last summer. Secondly, there is a measured target around 7, so while it is clearly getting short-term oversold, I would not get involved just yet.
National Storage (NSA) could get interesting in the next few months if this base it has been working on since August develops further. It’s too soon to say. If this 28-29 area holds into year-end, I would have another look at it.
