Skip to main content

Careful What You Wish For

So many are calling for a pullback or a correction in the market. Normally, I would would agree with them. But look what I found...

The Market

Someone asked me today if it’s bullish that so many are calling for a pullback or a correction in the market? Normally, I would answer with a resounding, Yes. I mean, as a contrarian, I believe that too many on one side generally tilts us to the other side.

But then, I look at the 10-day moving average of the equity put/call ratio, and I see it at 51%, the lowest reading since April 15, 2010 when it was 45%. So I say OK, there is still room to get even lower – more bullish – but at what point is enough enough?

Image placeholder title

Or, I look at the 30-day moving average of the equity put/call ratio which is at 50% and note that on April 26, 2010 it was at 50%. I also note that on Jan. 20, 2011, it was at 50%.

Image placeholder title

The April 2010 readings are interesting since late April the market peaked, and within a week we experienced the Flash Crash. The January 2011 reading is more nuanced, since the S&P 500 rallied a bit more, but then spent several months going nowhere before eventually succumbing to a very large decline in the summer of 2011.

It’s possible these readings continue to mean nothing. But surely they are contradictory to the notion that everyone is calling for a pullback or a correction.

I will finish with a note that the Daily Sentiment Index on the Volatility Index: It is 11. I keep waiting for a reading under 10, and we haven’t gotten one. Every time it gets close we see a down day in the market, enough to get the DSI rising again.

New Ideas

I have been a fan of FedEx (FDX) - Get Free Report for a while, ever since it reported that lousy quarter and everyone decided they hated it. Those are usually my favorite kinds of charts. It has now rallied back to a downtrend line and if it can get over it, I think it finally changes things for this chart. This downtrend has been in place since September (perhaps a bit earlier than that).

Image placeholder title

Someone brought the chart of Adaptive Biotechnologies (ADPT:Nasdaq) to my attention, and since it is a rounding bottom, I thought I should share it with you. It was up a lot Wednesday, so it would need to continue strongly for a breakout, but I like the chart.

Image placeholder title

Zscaler (ZS:Nasdaq) is a chart I recommended a few months ago, and continue to like. I was asked about it on the eve its earnings. Let me state right now I have no interest in playing earnings. It’s a coin toss. So take whatever I say with an entire shaker of salt.

It has reached its measured target of $66, so I struggle to like it right here. A pullback toward the line and I would like it more. If it manages to surge from here, then there are layers of resistance all the way up, so it’s a matter of whether or not it can get through them. The first serious one is $70.

Image placeholder title

Today’s Indicator

The volume indicator is at 50, which is dead neutral.

Image placeholder title

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.

I think if HubSpot (HUBS) - Get Free Report can flag here like it did from $185 to $175, then it has a chance of getting up and through that old high with some pizzazz. If not, I’m inclined to think it will stall out in the neighborhood of the old high. For now it is attempting a flag.

Image placeholder title

It is possible that Cisco (CSCO:Nasdaq) is forming the right shoulder of a head-and- shoulders bottom, but it has barely rallied after its earnings disappointment. I think it is getting oversold enough to bounce, but I’m not sure it can do more than fill that gap.

Image placeholder title

I do not love the chart of SPDR Euro Stoxx 50 exchange-traded fund (FEZ) - Get Free Report, but only because it peaked in early January and has not been able to surpass those highs nor make a higher high. But a move over $41 would measure to the $43 area.

Image placeholder title

HUYA (HUYA) - Get Free Report is an interesting chart, because if it can get up and over this $21-$22 area, it clears a hurdle. It doesn’t mean it’s clear sailing because there is resistance all the way up, but crossing that line is the first step in improving what has been an awful chart. The company is slated to report early next month.

Image placeholder title
Dow is the Most Vulnerable to Profit Taking

Dow is the Most Vulnerable to Profit Taking

Despite the newfound focus on the Dow Jones Industrial Average last week, it turns out we may be seeing the last gasp of outperformance here.

How Hungry Is This Market?

How Hungry Is This Market?

Here's what I'd like to see happen with this rally -- I'd like it to show some FAANGs. Here's why -- and a look at Microsoft's chart, news highs and more.

Sloppy With a Chance of Rallying

Sloppy With a Chance of Rallying

Here's why I see another rally before the weekend, even amid the messiness, and a bump for Amazon.

Sloppy With a Chance of Rallying

We Can Rally Just a Bit More

Energy stocks have a lot of complacency in them.