Skip to main content

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.

The Market

And there is the rally. I hope we add to it tomorrow. In fact, I hope tomorrow’s rally finds some of the FANG stocks like Amazon AMZN (AMZN) - Get Free Report and Microsoft (MSFT) - Get Free Report rally.

You see, it’s anecdotal, but I sense a very different tone in the market today vs. just yesterday or a few days ago. The last week’s chop has reigned in some of the bullishness that had developed after the consumer price index number, and today seems to have brought some of it back. If tech stocks can rally folks might get more bullish than they were post the CPI.

I continue to focus on the Volatility Index, which is now at $21 or so. The Daily Sentiment Index is now at 18. Again, you can see how more upside in stocks and more downside in the VIX will give us the set up for a pullback.

For those who want to believe such a pullback will be similar to the August pullback I would say I don’t think so. The reason is because the market rarely repeats the same pattern that quickly. There is far too much recency bias involved from that August/September decline.

Another reason is the charts look different. We have been in this trading range since the spring. It’s been six months already. In August it had been two to three months.

The New York Stock Exchange's new highs continue to disappoint, especially with the S&P 500 eking out a minor higher high. Today there were 76 new highs compared to early November’s 98. But Nasdaq is back at 139 new highs so it is possible Nasdaq increases the new highs beyond November.

Image placeholder title

Keep in mind that in August the McClellan Summation Index turned down quickly. So far it has not done so. The chart is shown below. Also in August Apple (AAPL) - Get Free Report led the rally and other stocks stopped participating. Now Apple and the other mega-cap stocks are lagging. Thus my hope they play a little catch up tomorrow.

For now I will keep monitoring the market internals and the sentiment and more importantly, the DSI for the VIX as we inch closer to that intermediate-term overbought condition. Because that is what will signal to me it’s time for a pullback.

Note: There will not be an edition of Top Stocks tomorrow evening. The next edition will be on the weekend. Happy Thanksgiving to all!

New Ideas

I am still waiting for Microsoft (MSFT) - Get Free Report to at least get to $250 and maybe over it. That would change sentiment for sure!

Image placeholder title

Today’s Indicator

The McClellan Summation Index is still rising.

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.

I was asked where I would buy Super Micro Computer (SMCI) - Get Free Report. That’s hard for me, because I am not into chasing up stocks, especially in this environment. I can report, however, if the stock fell to the $70 area it is probably buyable with a stop around $68. Right now if it goes over $90 then the 90/100 rule goes into effect. That rule says that 90% of the stocks that make it to $90 will go to $100.

Image placeholder title

Could MSOS (MSOS) , an exchange-traded fund for the pot stocks, finally be bottoming? It is far too soon to say that. If the chart can hold that uptrend line (around $11) then it has a shot at making it toward $14 but overall if this is to become a bottom my guess is there is still a few more months of sideways to go.

Image placeholder title

The question is where to sell the United States Natural Gas fund (UNG) - Get Free Report, which I recommended last week; $23-$24 is the spot it has some decent resistance and so I would be inclined to take something off the table there.

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.