One thing is for sure: Very few stocks have had a trend for months.
This is true, even if we take the semiconductors, which have had quite mixed results in terms of news. Some earnings have been lowered in the group and still the Philadelphia Semiconductor Index (SOX:Nasdaq) is at 1560. That’s the same place it was as we headed into early May when the China trade deal first fell apart.
The decline in September just filled the early September gap, but it’s not as though there has been much progress made, is there?
Or what about the banks? They had a terrific move in September, but all it did was recapture what it lost in August. Then they promptly gave half of the move back last week. That means overall the Bank Index (BKX:Nasdaq) is the same place it was in early February.
Remember how fabulous the software sector was this year, or so they said? Well iShares North American Tech-Software (IGV) - Get Free Report, an exchange-traded fund for software, is the same place it was in March. That’s six months of nothing.
I know the chart looks like a giant head-and-shoulders top, but is it too obvious? What if it crosses that downtrend line in the coming weeks?
Sure, that’s possible, but in the meantime, the point is we’re talking about a big fat nothing for six months in what is supposed to be the hottest group.
Even if we look at stocks from Friday – most of what was up on Friday gave back all or some of the move Monday. And that is exactly what all the indicators reflect. They got a little bit oversold late last week; it wasn’t a great oversold. Sentiment got bearish, but not so bearish that we heard calls for lower targets across the board.
It is much easier for the market to make a decent move if or when the short- and the intermediate-term indicators line up together. That’s just not the case right now. We have the short-term not as oversold as it was and the intermediate-term indicators not oversold yet. So let’s say we head back down, the good news is that we may see fewer new lows than in August. The good news is that if we head back down sentiment will surely get extreme and too bearish. And maybe the intermediate-term indicators would get oversold. Otherwise, it’s a choppy mess.
Last week I also said I thought Cyber-Ark (CYBR:Nasdaq) could rally to $110-$115, where I would sell it. I am still waiting for that rally to complete.
I was asked to follow up on Palo Alto Networks (PANW) - Get Free Report, which I thought was a sale in the $220 area. I still think it stalls out at $220-$225. If I am wrong, it will have to rally to $225-$230 then pull back to make the chart improve. Here’s another example of a stock that has gone nowhere for about five months.
The 30-day moving average of the advance/decline line is not oversold.
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I had written up Starbucks (SBUX:Nasdaq) as a “sell” about a month ago, believing it could fall to the $90 area. It held $90 for a while, but has since broken the long- standing uptrend line. A rally back to $90 would be a good place to sell.
For now Goldman Sachs (GS) - Get Free Report has held support, but I’m not so sure it can go anywhere special on the upside. If it can trace out a pattern similar to what it did in late August down to $195, rally a bit, back down to $195 and hold — thus forming a W pattern — then I might be keen for it to rally back to resistance. But barring that pattern mapping out, I’d say be cautious should it break $195.
CVS (CVS) - Get Free Report has achieved the upside measured target from the base (the breakout was at $57) and has now corrected. I would like to see it do more work in the low $60s to give me confidence it is ready to rally and fill that gap up above near $68. But so far, it has done nothing wrong.