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Giddy Up!

We've got a chop-fest. But get ready to hop over to overbought and slide in April. So, saddle up, folks.

The Market

So that’s what we get with the market still not overbought, but sentiment too giddy: a chop-fest.

The New York Stock Exchange is getting closer to an overbought reading, but that is only because the Oscillator is already over the zero-line. Can you believe the Nasdaq’s Oscillator — even after a 600-point rally in three trading days — is still under the zero line? I am not sure I have ever seen that, but that’s what we have.

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Now let’s talk about the math behind Nasdaq’s Oscillator. It is the 10-day moving average of the net of the advance/decline line. If we look back 10 trading days ago, the net for Nasdaq that day was a negative 3081. It’s hard for me to imagine that we will see a reading worse than that tomorrow, thus I fully expect the Oscillator will scoot over the zero-line tomorrow.

Thursday this indicator drops a net negative 2,200. While that is easier to have a larger negative reading, it is also a pretty big negative number. After that, though, we start dropping positive numbers and that is what makes us overbought by Friday. So, personally, I would like to see one more push up.

I already think sentiment is too bullish, although days like today where we have no follow-through from yesterday’s rally tend to temper the enthusiasm, but imagine if we rally for another day or so? Then we’d be overbought at the same time sentiment would be far too enthusiastic. When that happens, we tend to get a pullback that we can actually see on the charts.

I will end by noting the potential head-and-shoulders top on the chart of the Russell fund (IWM:Nasdaq) is still in the works. But remember, the longer it takes to develop, the easier it is for everyone to see. When everyone sees it, they prepare for it and that’s why they tend not to work.

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Recall a few weeks ago, Nasdaq had a similar pattern — a head-and-shoulders top — and it plopped and then rallied. That’s just something to keep in the back of your mind. In any event, I still think the latter part of April will see us with another pullback.

New Ideas

I was asked for a follow up on International Paper (IP) - Get Free Report, which I recommended here many months ago (last summer), as a long term good chart. It has not zoomed, upward but has gone up in layers. The measured target is still in the mid-$60s. It’s been a very slow grind.

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Today’s Indicator

The McClellan Summation Index is still rising. It would need a net differential of -1800 advancers minus decliners on the NYSE to halt the rise. I hope you can see that it won’t take much more than one harsh down day to halt the rise. The cushion is not great.

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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.

I want to revisit the chart of Alteryx (AYX) - Get Free Report, which I was asked to look at about a week or so ago. The reason is that you can see how the chart could start shaping up better with late March having the potential to be the head of a head-and-shoulders bottom (left shoulder in early March).

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Royal Gold (RGLD:Nasdaq) is developing a base. There is a lot of resistance at $115, but this is the first sign of a base we have seen in a gold stock outside that Newmont (NEM) - Get Free Report we looked at a few weeks ago. Any pullback toward that $110 area looks buyable.

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Inari Medical (NARI:Nasdaq) could be just as easily consolidating as it could be making a top. If it can get through $115, I think that high near $125 is the best it can do in the near term. If it should break that uptrend line, then all bets are off and I’ll start thinking it’s a top. For now it gets the benefit of the doubt.

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