I guess overbought markets don’t much care for a more aggressive Fed. And that’s where the market stands.
Let’s start with breadth. It was bad. It hasn’t yet turned the McClellan Summation Index down, though. That requires another day of poor breadth. I do, however, want to note that the number of stocks making new lows has expanded greatly. As we know the new highs were lackluster, but new lows are on the rise.
What I will focus on when it comes to Nasdaq new lows is if Nasdaq takes out that December low at 14860 (intraday), will there be fewer than 610 new lows? Yes I know the 610 reading didn’t come at the low but it is the highest reading just prior to the low. Obviously fewer new lows than 710 would be important as well. Why? That would be a positive divergence.
Let me note I do think most of these Nasdaq/growthy names are rolling over and even most (not all) of the ones that are down and out are not worth trying to bottom fish, but that doesn’t mean we shouldn’t think a bounce is due at some point.
Nasdaq itself has one heck of a trend line here. I don’t feel as though we see a lot of hysteria, but we definitely see an awful lot of "you can’t own tech/growth" and usually that is the point where we get a bounce.
The Invesco QQQ (QQQ:Nasdaq) traded over 70 million shares today, so now we have high volume there. There is support on the QQQs at $375-$380. I would look at the QQQs –- for a bounce only — if they got there. Especially if there were fewer than 710 stocks making new lows on Nasdaq.
The put/call ratio jumped to 1.05, so folks got a bit cautious today. My Oscillator shows no sign of being oversold, having just reached an overbought reading, so for the stocks that are now in favor, such as the Energy Select Sector SPDR Fund (XLE) - Get Free Report and Bank Index, which we looked at last night (and said take some profits on). I would say some backing off and correcting is a good thing.
I will end with one final note on bitcoin. It’s not something I tend to comment on unless asked. But I did highlight Coinbase (COIN:Nasdaq) recently and it is into support. The DSI for bitcoin is now 18. The service (DSI) only started tracking this a few months ago and it was spot on when it got at/near 90 and bitcoin made a high, so I am hoping a low DSI will help COIN should it get there.
SPDR S&P Metals & Mining fund (XME) - Get Free Report got to that first target at $47 today and I do think it’s a good idea to take a little off the table, after a near 20% run in a few weeks. I would like to see some backing and filling before it rallies again.
Steel Dynamics (STLD:Nasdaq) had a nice pop today and it stopped right at resistance. I would like to see some sideways action, but I do not want to see it trade back under $64, since that would signal a reversal to me.
The Volume Indicator is now a little bit overbought at 51%.
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Mercado Libre (MELI:Nasdaq) had that nice rally to resistance and is now heading down again. There is minor support at the gap fill at $1,100 and then the low just under $1,050. I would not be surprised if this eventually makes its way to the $950 area, where there is a measured target.
I can calculate a downside target on Bill.com (BILL) - Get Free Report in the $160-$180 area. I don’t know if it gets there in a straight line or if it opts to rally first. It’s hard to say where I would be wrong, but I guess it would have to rally over $260 for me to feel I was wrong about this stock.
Devon Energy (DVN) - Get Free Report hit the upside measured target from this last consolidation. I would like to see it back around $44-$45 to see if I would like it again down there. For now I’d lean toward some profit taking.
I am struggling on where I think Freeport McMoRan (FCX) - Get Free Report can come back to. It did get to that first target/resistance area, so I would take a little something off the table. Now I want to see if it can stay over that blue line (call it $41-ish), because it if can, then I would expect it to break out on the upside after some correction/consolidation.
Roblox (RBLX) - Get Free Report has some support here, but I think it is tenuous. A break here would probably mean a move toward around $80 to fully fill that gap below, maybe even $75, where that blue line comes in. If it can hold this area for a few days then maybe it saves itself.