Will Microsoft Plunge Back to Its August Low?
We might see a turnaround on Tuesday, but it's unlikely that there's much of a rally to be had right now.
You're reading 0 of 1 free page.
Register to read more or Unlock Pro — 50% Off Ends Soon
The Market
Are you hoping for Turnaround Tuesday? You might get it, but I will say what I said yesterday: the indicators do not suggest we are set up for a great oversold bounce.
First of all, please recall the table I published here yesterday. To set up a nice oversold bounce, we need more red on that table. When we drop red numbers, we are oversold. There was not much red on that table which means we are not oversold.
I even figured I should check in on the Nasdaq Momentum Indicator to see if we are even close to oversold using that data. The earliest I get is March 4th for an oversold reading. Now, I know I often say that the exact date is not what matters but the time frame. But the fourth is a week away, so it’s too far for me to fuss. As we get closer, I will keep checking it.
Nasdaq’s McClellan Summation Index, using volume, is negative, as it turned down weeks ago. But I checked in on what it will take to turn it back up. It will take a net differential of +7 billion shares, which is a lot. That is up minus down volume.
I have one caveat, though. Since the election, the total volume for Nasdaq has risen quite a bit, as it used to be 5 billion shares daily, and now it is regularly 7-8 billion. I submit that what it took to turn it a year ago might not be the same as now (it would be more).
Nasdaq’s new lows jumped to 256 on Monday, which means it’s a close call. We have more than we have had, but not as many as we had in mid-December.
The best news of the day is that breadth was okay today, with the net differential at -260. So, the selling was not widespread; it was concentrated in the hot momentum stocks.
Finally, there is sentiment. The put/call ratio was .99. This is the highest reading since January 2nd! Anecdotally I see where some strategist types have taken down their expectations for stocks now. I’m quite surprised it happened this quickly. But at least sentiment is finally loosening up a bit.
I think it leaves us where we have been--at best, choppy but likely more rocky for late February/early March.
New Ideas
Microsoft MSFT has done what ITB did last week: trade under the support and then rally back to close at it. I would love it if it plunged to that August low because that would show us something. What we have now is just more toying.
KWEB finally backed off today. This is a reminder that it ought to come back to that 32-ish area.
For VGK, I would like to see a dip back into support around 67-68.
Today’s Indicator
The 30-day moving average of the a/d line is still overbought.
Q&A/Reader’s Feedback
Helene welcomes your questions about Top Stocks and her charting strategy and techniques. Please send an email directly to Helene with your questions. However, please remember that TheStreet.com Top Stocks is not intended to provide personalized investment advice. Email Helene here.
Lyondell Basell LYB is attempting to make a stand down here with higher lows. It would be great if it could rally to 80 and then come down again. Back and forth builds bases. Mapping out something as I have drawn in blue would be a positive for the chart. But that takes time.
Leidos LDOS broke support in late January when it broke that blue line. Technically speaking, that means that over the long term, the chart ought to measure to the 95-ish area now. My guess is it mills around, attempting to hold that 125 support for a while, but that’s the best I see right now.
I am still waiting for Pfizer PFE to get over 27.50 and start eating through all that resistance and it hasn’t even been able to do that. It would be terrific if it could map out something like I have drawn in blue. With that juicy dividend, it’s hard to see it collapsing.
Costco COST has been riding this channel since August, so despite the stock being wildly expensive and the fact that the selling dried up after a handful of down days, it tells me unless/until there is a change in the channel, that’s what we go with.
United Parcel Service UPS hasn’t done that much work down here, so my confidence that it will fill the gap to 120 isn’t high. However, if it can get up there on this run, I’d be happy to sell some in that area. I’d rather see it pull back under 115 and rally again to get up there, giving it a rest along the way.
Starbucks SBUX has a measured target in this 110-115 area. It continues to creep upward, but I would say it feels vulnerable to a correction. I’m a fan of taking something off the table if you’re long.
