I'd like to tell you that I see something different in the market today than I have seen for the last several days, but I do not. I suppose the only difference is that on Tuesday all eyes will be on Fed Chair Janet Yellen and her testimony to Congress.
It remains my view that the market is short-term overbought and that we should see a pullback and then another rally attempt. I would change that view if the intermediate-term indicators rolled over, but so far they have not. The 30-day moving average of the advance/decline line is not overbought. Perhaps if the McClellan Summation Index, which admittedly keeps threatening to halt its rise but hasn't done so, rolled over, it would change my view.
The curious part of today was that the indexes don't tell the full story. There was some decent selling today. We know that because at one point the TRIN was up to 2.0 during the trading day. Those types of readings are typically reserved for days where the S&P 500 falls 1% or more.
To expand on that, on Friday the net volume on the NYSE was +1.15 billion shares. Today's net volume on the NYSE was -925 million shares. So in the last two trading days the net volume on the S&P is +225 million shares while the S&P itself is up 12 points.
Today we got another sentiment indicator that shows folks are bullish. The Blogger Sentiment is now as bullish as they were (58%) back in the fall of 2013. So they haven't been this bullish in over a year. The put/call ratios did not show as much "fear" today as I thought they would, though. For example, last week saw more put buying than today did. It's as though folks all think Yellen will be market friendly. That is a big change from just a week ago, when the put/call ratio remained steadily over 90%.
With Yellen's testimony in front of us for the next two days, I want to take a minute to revisit the chart of TLT. I realize we have been discussing the chart of yields on the 10-year note, so I will reiterate that unless the yield can get back under 2% and stay there, this pullback from the 2.10% level we discussed last week still looks temporary.
As for the TLT, the level I've got my eye on is around 129-130. If TLT can get back over that area, then interest rates are likely going down, not up. If it fails in that area, then TLT looks poised to test the 122-123 area.
I was asked about GrubHub (GRUB) and, much to my surprise, I see a nice base on the chart. I'll admit I don't like that it hasn't yet taken out the early February high, but if the stock can stay over $39, and more importantly if it can break out over $42, then it completes the base with a measured target first at $47- ish and another one in the low $50s.
Apollo Group (APOL) is a down-and-out stock that has a chance for a quick trade to the upside should it break out over $27. The first quick target would be $29- ish and maybe even a gap fill all the way up to $32 (might be asking too much). I'd use a stop under $26.25.
With the West Coast dock strike over, there is a lot of chatter about how we're going to see all those backed-up goods get moved across the U.S. Several months ago, I noted I like the base in JB Hunt (JBHT, still do on a long-term basis), but in the near term if YRC Worldwide (YRCW) can get through this $20.50 area, I think it can get back to $23-$24.
We looked at Alibaba (BABA) a few weeks ago with the idea that it should bounce off $85. It did but it has since come back down. I think if the stock breaks $85, we might not only start to get some panic selling but chatter about the expiration lock up that arrives in mid- March. So watch that level of $85. It really must hold.
The 30-day moving average of the a/d line is discussed above.
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InvenSense (INVN) looks as though it is trying to bottom. I might even make the case for it having a very funky looking head-and-shoulders bottom. There are two hurdles, though. The first is crossing the downtrend line that has been in place since last summer ($16) and the second is crossing that flat resistance line at $17. I’d be willing to give it a try on the long side with a stop under $15. If it can get through $17, it ought to fill that gap near $20.
I was asked what the upside target was for the DAX, a chart I showed here a few months ago, with the potential breakout of a head-and-shoulders bottom. That pattern measures to approximately 11500 so I would expect the DAX to take a breather there. In fact, as we look at the chart despite the upward tilt in February, the DAX has actually been consolidating almost the entire month.
In the past I have liked Foot Locker (FL), but I look at the chart now and think it looks to me as though it is trapped between support in the $51-$52 area and resistance in the $56-$58 zone. A rally over that downtrend line would still get stuck at resistance, but at least then we’d be able to say it’s OK to buy pullbacks. Now we say the chart looks like it can’t go up, can’t go down.