Once again, we have the inverse of the prior day. Will tomorrow bring us a day where the mega cap-tech stocks rally and today’s winners die?
To sum up the indicators, breadth was good, enough to get the McClellan Summation Index pointing upward. That’s new. The chart is shown below.
Also, the number of stocks making new highs for the New York Stock Exchange increased again. It’s still pathetic relative to January, but an increase is an increase.
Sentiment is still not my cup of tea, as we see the put/call ratio far too low. In fact, for five of the last six trading days, the put/call ratio for exchange-traded funds has been under 1.0. the 21-day moving average still has some time to move lower, before it gets to danger territory, but soon it will join the equity and total put/call ratios in how low it is.
There are, however, a few groups to discuss. First, gold and silver. The SPDR Gold Trust (GLD) - Get Free Report has not quite made it to that target area I have of $175-$176, so there is a bit more room. The Daily Sentiment Index is 86.
The iShares Silver Trust (SLV) - Get Free Report has a higher target, but the DSI is 93, so it’s hard for me to like it up here. A pullback to the $18.50 area would be buyable. Longer term, SLV measures to $22-$24.
Then, there are the banks. I know everyone hates them. But I have been warming up to them for a few weeks now and I am still a fan. I have highlighted JP Morgan (JPM) - Get Free Report as a name I like, as well as Citibank (C) - Get Free Report. If we can just get Citi over this mid-$50s area, the chart shapes up nicely.
We have not talked about oil in quite some time, but the chart of the VanEck Vectors Oil Service Sector fund (OIH) - Get Free Report is shaping up, as well. I do not want to see it trade back under $120, though.
Just a word on all these commodity, or reflation trades. A lot of them are predicated on the weak dollar. The current DSI for the Dollar Index is 15, so any more weakness in the dollar and I’d have to start to look for a counter trend rally in the buck.
I was asked to follow up on Mosaic (MOS) - Get Free Report, a stock I liked almost two months ago. It had a nice run, pulled back to support, and is trying to get going once again. It really needs to get up and over $14. If it can’t do that soon, I will give up on it. Earnings are expected in early August.
I was asked about Facebook FB, and it’s been a laggard in the mega cap tech trade. It seems to me that the chart is vulnerable to come down and tag that line around $230. Facebook is set to report earnings later this month.
The McClellan Summation Index is discussed above.
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Tilray (TLRY:Nasdaq) looks like so many of the other stocks we’ve looked at lately. You know, the down and outers. This is a bit more sleepy than the others in that it hasn’t been able to even get near the mid-June high, but I suppose as long as it stays over $6.25, it gets a chance to pop to that $10 area.
I have been asked about United Health (UNH) - Get Free Report, so often in the last few months and I think each time I write it up, I have said it’s going nowhere. I will say this, though, if it can get going now and cross over that prior June high, it has finally done enough work to believe it would break out and enjoy a run. Shorter term, I’d use a stop under $300 or even $290-ish or you can watch for a move upward and jump on.
Letter X (X) - Get Free Report might just try to fill that gap and tag that line near $9, but if you’re looking at steel stocks then Steel Dynamics (STLD) - Get Free Report is much more interesting because it has more support down below in case you’re wrong and it has crossed the downtrend line and retested it.