Getting Even

The Market

I am staring at my notebook, where I jot down positives and negatives. I’m shocked. Why? That's because the lists are relatively even.

But I see many of the items on the list have a question mark after them, meaning is this tentative or real? For example, I do not think sentiment is panicked. I do, however, think it is bearish. We can see that in the Investors Intelligence bulls, which chimed in this week at 39.8%, the same as they were in early December.

Or, there is the 10-day moving average of the equity put/call ratio, which is getting quite close to .56, a level that has been "enough" for the last 18 months.

On the breadth front, breadth hasn’t been good -– but we knew that would be the case. Here is a chart of the cumulative advance/decline line (blue) with the S&P 500. Notice the S&P is at the early December low, and lower than the late December low and breadth is still higher. That’s a minor positive.

Yet, overall, the McClellan Summation Index has rolled over so that’s a breadth negative. Then there is Nasdaq’s new lows, where they have not yet exceeded yesterday’s reading of 817, with today’s reading of 772. A glimmer of hope. But the New York Stock Exchange did see an increase from 299 to 312.

The Volatility Index has not gotten jumpy, but at 24 it is finally on its way. And here’s the big change: The Daily Sentiment Index for Nasdaq has come down to 33. While no one wants more downside we, all know that at this point it is finally closer to a low than a high. The S&P’s DSI finally fell, too, although it’s not enough at a level that says we need to focus on it since it stands at 47.

I think the best news of the day is that the semis finally took a hit. I have been negative on them for sometime now, and my negativity hasn’t done me a bit of good. Today they finally broke down and folks noticed. It is one of the last technology hidey holes and that’s why I say that’s good news. When folks sell their favorites you know there has been a sentiment change.

New Ideas

I want to note something about the energy stocks. I have been noting Energy Select Sector SPDR exchange-traded fund (XLE) - Get Free Report and it barely budged today. But notice that the more volatile VanEck Oil Services ETF (OIH) - Get Free Report has not managed to take out last year’s high and turned down today from roughly the October high. I still think energy is overdone here. I am a fan of taking some profits.

Gold had a big day today, so I want to remind you that the next resistance is this $172-$174 area. The best news is that no one seemed to care. If they start caring, be careful.

Today’s Indicator

The Volume Indicator is 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.

Innovative Industrial Properties (IIPR) - Get Free Report completed a funky head-and-shoulders top in early January (the right shoulder is higher than the left). It measures down to the $170- ish area, which is also where the lower line comes in. So, for now, I’d sell rallies.

Live Oak Bancshares (LOB:Nasdaq) is a complicated chart. First of all, it hit its target back in November. It also managed to complete the 90/100 rule (90% of the stocks that make it to $90 will make it to $100) and then when banks had their big run recently it couldn’t make a higher high. So, should I trust it down here at support near $70? I say let it prove it to me. If it is going to be any good, then it probably has weeks if not months of sideways action ahead of it. If it can’t hold over 70 it’s problematic.

Citibank (C) - Get Free Report had a terrific rally to resistance. Now I would like to see it do some more work in the $60 area. That top it broke down from was about six to eight months in duration, so one rally into it will not be enough to eat through the resistance. Patience is needed.