While FOMC Looms, Is Silver Overdone?
Plus, does the market care about the dollar?
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The Market
Clearly, the market doesn’t much care about the move in the dollar (or the yen) because it has plunged and all we’ve gotten is yawning.
As we approach the FOMC Meeting, I want to point out a few things. The S&P has been up for five straight days. The last time it went further, it went to six before a pullback. It has also seen the VIX green for the last three days. That too is unusual.
In terms of volume, the SLV ETF and ZSL, an ETF to be short silver, have traded so much volume between them that it amounts to 16% of all the volume on the NYSE. I know silver is hot, and everyone wants it, and it refuses to go down, but I also know these are the seeds of something that is overdone.
Finally, aside from the VIX being green for the last three days, today’s put/call ratio sank to .74. I guess folks are counting on the mega cap stock earnings cranking us higher. Recall that on Friday, January 16th we saw the put/call ratio at .73, and then next day the S&P lost two percent.
I would welcome a whack, especially in the mega cap names, because even though I have warmed up to some of them in the last week, I like to see them come back down again to tell me the buyers have shown up again.
New Ideas
A couple of weeks ago, when Arm Holdings (ARM) was near the low, I was asked about it, and I said I thought it was oversold enough for a rally. We got a nice rally, but now it has backed off, possibly forming one of my favorite patterns: a head and shoulders bottom. Be careful because earnings are next week.
Today’s Indicator
The McClellan Summation Index is still rising. It would take a net negative -300 advancers minus decliners on the NYSE to halt the rise. That is not a big cushion.
Q&A/Reader’s Feedback
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American Tower (AMT) is trying to build a small base. It’s still quite small, but when it tagged 167 earlier this month, it met its measured target off the top that it broke down from in August. There is much resistance to chew through, but I like the way it is shaping up, so I’d lean toward nibbling at it.
There is not much new to say about Raytheon Technologies (RTX) , a chart I liked months ago. As long as it doesn’t break that uptrend line, then it hasn’t done anything wrong.
Eli Lilly (LLY) hit its measured target in the 1125 area. I don’t love the chart up here but if it can just go sideways for several more weeks without breaking under that 975-1000 area, it’s possible this is just a consolidation.
I believe we have looked at this channel in Procter and Gamble (PG) a number of times in the last few months, and my view has been we buy the tagging of the lower line and sell the tagging of the upper line. If it can cross over 152 and hold it, then that pattern changes, and I would consider it a stock that is finally trying to base.
Reddit (RDDT) has some support at 180 and more at the gap fill near 160, so unless it can gap up and recapture 200, it probably makes its way down into support.
GE Vernova (GEV) has earnings out in the next day or so, and I would remind you that I don’t ‘play’ earnings because to me it is gambling. That having been said, the stock has a measured target around 750, and I don’t want to see it trade much under 600-625 because that would leave a lower high.
KLA Corp (KLAC) also has earnings in the next day or so. I don’t have any measured targets left for it, and the stock is over-extended. But as long as that uptrend line holds (yes, I know it is far away, thus the over-extendedness) then it would just be another correction but would not have done anything wrong. It is also at the top of a channel, so yes, it is vulnerable to a correction.
Unusual Machines (UMAC) needs to hold this 14-15 area. If it can, then the chart should shape up again, having finally crossed that downtrend line.
