Monday's Rally Just Had No Life. Can We Get Another Lift This Week?

Traders reacting

The Market

I’d love to tell you today’s rally changed the indicators, but it did not. We remain short-term oversold. We remain mired in bearish—but not panicky—sentiment.

On an intermediate term basis, the McClellan Summation Index is still heading down, but whereas we came in Monday needing a net differential of +4200 advancers minus decliners on the NYSE to halt the decline, now we need just +1700.

The Hi-Lo Indicator for the NYSE is now at .43, the November low was .41. It would be awesome if this could get to .15 or under. That, I think, is unlikely to do so in the next few days. We’d need to really get smacked to the downside for a few days for that to happen.

The same is true for Nasdaq’s Hi-Lo Indicator. Only it is at .27 so it is much closer to getting to an extreme oversold condition. Oddly enough, Nasdaq often gets oversold just under .19, although you can see it often goes lower than that before being solidly oversold.

The options ratios also showed very little change today as folks were not terribly keen on buying calls. I really do believe folks are quite ‘hedged up’. That’s probably one reason the S&P hasn’t come down all that much in this decline. And this is a triple witching week (daily, monthly, and quarterly expiration), which helps exacerbate the moves.

The bottom line is I am still looking for a short-term oversold rally this week, but boy, today had no life.

New Ideas

Nutrien (NTR) is a stock I have liked for just over two years now, but the action today has moved me to the sidelines. That now looks like an island top, those two days trading either side of 84. It’s always possible it won’t matter, but it’s been a great run, so I don’t mind being sidelined now.

Today’s Indicator

The 30-day moving average of the advance/decline line looks oversold, but the math says ‘not so fast’. Nasdaq’s, though, is oversold. There’s the Either/Or market again.

Q&A/Reader’s Feedback

I am inclined to think RH (RH) rallies from here. I am also inclined to think that it runs into some trouble in the 140-145 area. But that is a long fall it has taken since mid January, and that looks to me like an oversold stock.

Alibaba (BABA) bounced off support and even made a higher low last week. I think it can rally to resistance around 145, although I would love to see it down at 130 one more time just to prove to me there were buyers there again.

I had thought the upper line on Boeing (BA) would hold on this trip down, and I was very wrong. For now, the lower line (probably the one more folks would draw in) has held. Therefore, the big test is if it can get itself back up over 220 during this oversold rally. If it can, then BA should be okay.