We Got a Bounce, But It's 2 Surprising Statistics That Are on My Mind

The Market

So we got the bounce. It mostly lasted until midday and then we churned the rest of Monday, but let’s see if the statistics were worth talking about.

Breadth was good. Upside volume on the NYSE was 84%. Decent but pretty much what downside volume was on Friday. What really struck me is that total volume for the Nasdaq was just under 10 billion shares. That is the lowest volume in the month of October so far.

I am not sure what to make of that. Are folks sidelined or is this the result of so many folks supposedly getting wiped out in crypto over the weekend. I have seen so many folks say that there was a huge margin call in crypto Friday. If it is true, that would imply we’ve taken some of the speculators out, which, in my view, is always a positive.

In any event, volume on the NYSE was the lowest since September 26. So basically that’s a change. I want to see if it lasts.

Another statistic of interest is that the number of stocks making new lows contracted, but not nearly as much as I would have thought. For example, the Nasdaq had 192 new lows on Friday and Monday had 140. Keep in mind the market wasn’t even down at any point on the day.

Finally there is gold and silver. The DSI for both is now at 87. They reached this area, actually a point or so higher in late September. So once again we’re on watch for this going over 90.

I’m still watching the banks as they report earnings this week.

New Ideas

One group we have not spent much time on lately is the homebuilders. I did say when D.R. Horton  (DHI)  was near the high that if it broke $170 I would be done with it. It broke, then rallied, and now is around $152.

Now notice where it came down to: a support level of sorts.

Look at iShares U.S. Home Construction  (ITB) , an ETF DHI is part of. It too is coming into support. The little top it broke down from measures to $97-98. It would not surprise me if the Homies enjoyed an oversold bounce later this week. They sure didn’t bounce much Monday. I’m just looking at a trade.

I was asked if Salesforce  (CRM)  had crossed that downtrend line I drew in last week (I’m viewing it with a positive eye). It hasn’t. Not yet. I still think it will. Who knows, maybe OpenAI will announce a deal with them since that seems to be what gets stocks going these days!

Today’s Indicator

The 30-day moving average of the advance/decline line is under the zero line but the math behind it says it’s not oversold. The math says maybe another day or so and then back down.

Q&A/Reader’s Feedback

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Eli Lilly  (LLY)  is a stock that has gone nowhere for a year. Oh there have been lots of swings but there has been no trend. I would look for some support down at that line. The sooner it gets to the line, the closer to $800; the more time it takes, the closer to $775. It ought to bounce from that area.

I was asked for a target on MP Materials  (MP) , which I recommended again last week. That two-month consolidation measures to $100-ish and the 90/100 rule (90% of the stocks that get to $90 will make it to $100) also says the next measured target should be around $100. I cannot chase a stock up over 20% in one day, though. Hopefully in the next few months it gives us another set up as it did last week.

BHP Group  (BHP)  looks like it’s working on a base. There is an unfulfilled measured target around $60. If it can get there in the next few weeks I would expect it will stop around there, but that would mean that it crossed the downtrend line, which ought to mean pullbacks near the line would be a buying opportunity.