Skip to main content

Hey VIX, You Might As Well Jump

When the Volatility Index gets up and jumpy, the market gets a better setup.

The Market

Well, we got some volatility Thursday. I mean the Volatility Index jumped to 17 before settling back at 15.50. Quite frankly, I consider that a positive, because getting the VIX up and jumpy gets the market to a better set up.

Speaking of set ups, a week ago we discussed the Nasdaq Momentum Indicator, which got overbought on Valentine’s Day. My own Overbought/Oversold Oscillator got overbought on Monday of this week. It’s not as though the market has backed off very much, but it certainly did lose upside momentum. I mean the S&P 500 needs to rally 8 points to close the week on the upside.

But more than that, take a look at my Overbought/Oversold Oscillator and see the way this up/down/up/down action this week has seen the indicator come down. If you’re bullish, this is what you want to see because when this comes down, the market gets oversold.

Image placeholder title

I don’t have a strong view about Friday or Monday, but I do know that if we can get some negative breadth readings next week, I think we can set up for oversold as we head into early March.

I would note that breadth was good Thursday, using the advance/decline line. We’ve had a day here and a day there where we see the S&P down and breadth good, and each time I am hopeful, and each time I am disappointed because there is no follow-through.

The good breadth was not enough to get the McClellan Summation Index heading up, so we’re in the same place we’ve been: We need good breadth for more than a day or two.

I will end by noting that the Daily Sentiment Index for gold and the dollar are at 93. Those are both getting extreme. Do not be surprised at pullbacks there.

New Ideas

I was asked to follow up on 3D Systems (DDD) - Get Free Report, which when we looked at it recently I thought would get stuck in that $12.50-$13 area. The question is if it has now done enough work to go further. I think if it can get going from here it can make its way toward $14-$15 now.

Image placeholder title

Today’s Indicator

The 21-day moving average of the put/call ratio for exchange-traded funds is very low. It is the lowest it has been since the high in January 2018.

Image placeholder title

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.

Baidu (BIDU:Nasdaq) has earnings next week, so put that on your calendar. The uptrend remains intact and as long as it stays over this uptrend line, it gets the benefit of the doubt.

Image placeholder title

Alibaba (BABA) - Get Free Report broke the uptrend line when it cracked under it in late January. It has since returned to the scene of the crime. Now as long as it can stay over this lower trend line it gets the benefit of the doubt. Breaking the second uptrend line, though, would turn the stock negative.

Image placeholder title

IDEXX Labs (IDXX:Nasdaq) looks like it failed up at the old highs, so I’d be sure to exit the long side of the trade if it breaks under that line.

Image placeholder title

When we looked at Merck (MRK) - Get Free Report a few weeks ago, I drew in this same uptrend line noting that a break under $85 was the place to exit longs. The stock has support in this $80-$82 area, but rallies back to that line (currently $86-$88) would be a good place to sell. I would note that it doesn’t have a big top at all, but if it rallies back to the line and fails it will start to draw one out.

Image placeholder title

McKesson (MCK) - Get Free Report is up too much for me to like it here, but that chart does measure to the $185-$190 area. If it pulled back to retest the line in that $158-$160 area, I’d be willing to give it a try on the long side.

Image placeholder title
Dow is the Most Vulnerable to Profit Taking

Dow is the Most Vulnerable to Profit Taking

Despite the newfound focus on the Dow Jones Industrial Average last week, it turns out we may be seeing the last gasp of outperformance here.

How Hungry Is This Market?

How Hungry Is This Market?

Here's what I'd like to see happen with this rally -- I'd like it to show some FAANGs. Here's why -- and a look at Microsoft's chart, news highs and more.

Sloppy With a Chance of Rallying

Sloppy With a Chance of Rallying

Here's why I see another rally before the weekend, even amid the messiness, and a bump for Amazon.

Sloppy With a Chance of Rallying

We Can Rally Just a Bit More

Energy stocks have a lot of complacency in them.