Skip to main content

I'm Turning Google, Amazon and Microsoft on Their Heads

Call this the psychedelic version of Top Stocks, as we take an inverted look at the charts -- it's pretty wild, man!

The Market

There is a lot of chatter about the selling in the mega caps. It has been relentless, and this week it has accelerated. I believe it has left room (and money) to go into other stocks. But is it overall bullish that one group continues to be a source of funds for another? No. It wasn’t bullish in 2021, when it went the other way, and it’s not bullish now.

There is a great desire to buy these stocks. Or, at least, I have folks asking: Isn’t this enough already? Sure it is. But it’s a short-term extreme. Let’s take a look at Alphabet (GOOGL:Nasdaq), which is now down 20% in just over a week. Only, I want you to look at the chart inverted, so up is really down, and down is really up.

Most folks would look at this chart and say, that’s bullish wouldn’t they? As one who hates to chase I would not say short this, but I can’t chase it. And it has gone beyond my target of $90, so it is stretched. If you wouldn’t short the stock, then why would you buy it? It should pull back (i.e. rally), but doesn’t it look more like late May, when it just went too far, pulled back, and went up again?

Image placeholder title

No one is really complaining about Microsoft (MSFT:Nasdaq), but here, too, if we look at the inverse of the chart, it looks like the trend is up (i.e. down). What I would note on the chart is it is tapping against a channel line and therefore should pull back from that line (i.e. the stock is a short-term buy for a quick trade).

Image placeholder title

And if we invert Amazon (AMZN:Nasdaq)? It looks like it just broke out. It measures to $75. In fact if you saw this stock rally to $105-$110 you’d sell it there.

Image placeholder title

Using my work, we’re still not oversold. The best news I have is on the sentiment side of things, because folks have turned cautious again. The equity put/call ratio on Wednesday was 1.14, the highest since March 2020.

I will tell you this, though, the Daily Sentiment Index for Nasdaq is 10, so yes we are close to a relief rally. That’s the sentiment. But unlike a month ago, the oversoldness isn’t there, as well.

With the jobs report out tomorrow morning, it’s a wild card. I suspect at some point during the day stocks stage a relief rally, but I’m not sure it can stick. I suspect if these mega-cap tech FANG stocks rally, it will be at the expense of everything else.

New Ideas

One chart I have my eyes on is EEM (EEM) - Get Free Report, an exchange-traded fund for the emerging markets. It has been going sideways for a few weeks now, and if it can cross that line – I’ll call it over $35.50, because that has been resistance for the last few weeks — it gets interesting. Especially if the dollar can back off.

Image placeholder title

Today’s Indicator

The 10-day moving average of the put/call ratio is heading up, which is typically not bullish for stocks.

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.

In the near term Apple (AAPL:Nasdaq) has support at that $135 area, but the way they have been selling the mega-cap tech stocks, I’m not sure I want to buy it for more than an oversold bounce should it get there.

Image placeholder title

Tesla (TSLA:Nasdaq) has held the first support area. I imagine like Apple it has another bounce in it but it ought to eventually make it down to $180. In the near term I’ll call it a trading range ($200-$240) but it seems realistic that $180 should get tagged sometime in the next few months.

Image placeholder title

The MSCI Brazil Capped ETF (EWZ) - Get Free Report is an interesting chart. If it can get through $34 it still has resistance all the way up to the spring high but over $34 clears a decent hurdle. I’d use a stop under $30.50.

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.