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Big-Cap Tech Pops, Breadth Turns Blah

Monday was all about big-cap tech, but there was more going on under the surface.

The Market

Monday was all about big-cap tech. Again. Oh sure, small caps were up on the day. But it’s the move in that handful of stocks that keeps the indexes moving so much.

Yes, I like Amazon (AMZN:Nasdaq) and Alphabet (GOOGL:Nasdaq), but I am not a fan of the way Microsoft (MSFT:Nasdaq) has gone parabolic, and I am not a huge fan of Apple (AAPL:Nasdaq) here. But, of course, everyone scoffed at Amazon in the mid-$1,700s and they love it now, so the contrarian in me wants to hate it.

Away from that, let’s just talk statistics. Breadth was pathetic at positive 500 advancers minus decliners. Heck, last Thursday and Friday combined saw breadth lose 900, so we’re still down over all -- yet the S&P 500 is up.

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The number of stocks making new highs has barely increased, while the number of stocks making new lows has increased. The New York Stock Exchange had 86 new lows and Nasdaq had 92. In case you need me to do the math, those are both awfully close to 100 with the market at all-time highs.

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But here’s a chart I don’t show often. This is Nasdaq’s McClellan Summation Index. This is not based on breadth, but rather on volume. You see, I believe that Nasdaq has so many stocks that go public and just languish there that up/down volume is a better measure of breadth for Nasdaq. This is especially in the current environment, where it seems all the money is going into big-cap tech.

As you can see, it typically moves with the Nasdaq. It’s difficult to find another period of time when the Nasdaq has rallied 5% and this indicator has gone down. And that down is not just a dip, because you don’t even have to squint to see it. It won’t take much to turn it back up, but Nasdaq has already rallied 5%.

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Sentiment-wise the Daily Sentiment Indicator (DSI) for the Volatility Index is at 12. I think that still means my call for ups and downs is valid.

New Ideas

I was asked to take another look at Roku (ROKU:Nasdaq), which I thought might be OK a few weeks ago when it was higher than it is now. I still think it is trying to break out of this channel, but so far I have been wrong. Please note: Earnings are on Friday.

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I was also asked if I had a target on Gilead (GILD:Nasdaq), which I liked months ago and has finally broken out. It measures to the old high in the mid-$70s.

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Today’s Indicator

The 30-day moving average of the advance/decline line is still not oversold.

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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.

Zuora (ZUO) - Get Free Report is my kind of chart. It has been basing for months and a move up through that resistance around $16.50 would be a breakout for a potential gap fill.

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Bilibili (BILI:Nasdaq) may be be a great momentum stock, but it will have to go up without me. I just don’t see a pattern I can feel comfortable with right now. All I see is that a stop under $21 is needed.

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I wanted Disney (DIS) - Get Free Report to come down and fill the gap around $133-$134 and it refused to do so. The chart is still OK, but I would have preferred that gap to be filled. It probably takes some time to eat through that resistance between $144-$148, though.

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