Monday's Rally Failed to Impress

NYSE Trader

The Market

That was it? That was the big short-term oversold rally? I hope not. I hope we don’t get a lot of back and forth with an upward bias because that would mean we’ve used up the short-term oversold condition by going sideways.

I still don’t think we got any extremes last week, but I do think that if we see the market back off in the next day or so, we’ll have another rally attempt.

One reason is we’ve not cycled back to an overbought condition yet. Another reason is that it’s hard to find anyone who liked today’s rally. I grant you, the rally was pretty pathetic, but if no one liked it, we usually get another attempt at it.

As for the indicators, none of them changed. It’s rare we see the market rally over one percent, and there is no change, but that’s what we’ve got. I would remind you that the Russell 2000 outperformed the other major indexes, which is what is to be expected based on those high put/call ratios for the Russell we discussed last week. Also, let me point out that the Russell has been green for four of the last six trading days.

But let’s talk about Gold. About a week ago, I warned that (GLD) looked on the verge of breaking that uptrend line, and it did so in spectacular fashion. Anecdotally, I haven’t seen anyone screaming bearish things about GLD, which bothers me.

However, you can see there is support here, and the DSI is down to 15. It ought to bounce this week.

I would love to see it bounce and then come down again because I like it when GLD gives us a gradual low (see the months from May to August—all that sideways action is what I like). But there ought to be a bounce this week.

New Ideas

I was asked to follow up on Arm Holdings (ARM) , which I liked back in January. It has done relatively well and continues to try to build a base. In the very near term the resistance in the 140-145 area is going to be tough to get through on the first time up (and the stock is overbought, having run from 115 two weeks ago). Some digestion between resistance and support at 130 would be a positive. I would prefer to see it stay over 120-ish.

Today’s Indicator

The 30-day moving average of the advance/decline line ought to get oversold around mid-month.

Q&A/Reader’s Feedback

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I would love the base that seems to be building on Take-Two Interactive (TTWO) to be larger, but in the very near term, I would treat this the same way I would treat most software stocks: It’s oversold and should bounce. If it can’t get over 210, I’d fret a lot. If it can’t get over 220, I’d still fret, but not as much.

Erasca (ERAS) hasn’t done anything wrong yet, but it seems tired and in need of some sideways action. For now, the support is around 13. I would not want to see that break because then I think it is likely to tag that lower line.

The textbooks would say I should not like Newmark Group (NMRK) because this is a flag and flags tend to resolve in the direction they were going (in this case down) yet I see higher lows for the last month so if it can get over 15 I think it can make a run toward that 16.50-17 area before it runs into some serious resistance. I am obviously wrong if it breaks 13.50