Some might say today was very "indexy," but I would say even many of the index names went nowhere.
Yet, the either/or market remains intact.
There really wasn’t much new today. Breadth was crummy most of the day, but improved late in the day, although it was not up to what it should be. And upside volume was terrible with the New York Stock Exchange at 51% and Nasdaq below 50%. But we have one more day until the intermediate term moves to an overbought reading. That’s the 30-day moving average of the advance/decline line. I think it pops tomorrow for its last fling upward.
There was very little change in the indicators as new highs remained plateaued and new lows are elevated on Nasdaq, while the NYSE saw its highest reading in two weeks (25), but in general remain relatively low. Sentiment-wise the American Association of Individual Investors bulls backed off a bit and the bears rose a smidgen. Here is the four week moving average of the bears. When they have gotten this low, we have seen a pullback shortly thereafter. In 2014, we saw a big sideways market for months.
The National Association of Active Investment Managers exposure moved up to 96.5, so they are not where they were prior to the February decline, but they too are getting up there.
I still think we pullback next week.
I do want to revisit the chart of the emerging markets exchange-traded fund, the iShares MCI Emerging Markets fund (EEM) - Get Free Report, because a week ago I drew in the potential for a head-and-shoulders bottom and it seems to be coming to fruition. I would give it a bit of leeway, because I expect a pullback next week, but I think this is going through that neckline at $55.
About a month or so ago I said I liked Amgen (AMGN:Nasdaq) for a rally to the old highs since it looked to me as if it was in a wide trading range and we were near the lows. And since I am a fan of health care stocks in general, it seemed a good risk/reward. Their earnings are not for two more weeks, but I’m starting to think if we ignore that spike high from January, this is a decent base. It will need some work to get through $260, so patience may be required.
I was asked to follow up on GBTC (GBTC:Nasdaq) -- the ETF to own bitcoin. I had recommended it last summer. Quite frankly, it only measured to around $30, so from here it’s tough to say where it can go. If it breaks that uptrend line around $50 I would expect it to have a big correction. The fact that it hasn’t taken out that late February high would have me taking some profits here.
The 21-day moving average of the put/call ratio for ETFs is closing in on the mid-October lows, so this is another sign of excessive optimism.
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I look at Pure Cycle Technologies (PCT:Nasdaq) and I see a potential head-and-shoulders top. Yet the uptrend line is intact. So, while I don’t love the chart pattern, I’ll just say as long as the uptrend line is not broken it gets the benefit of the doubt. Be careful if it breaks though.
Back in January I thought the long term chart of Raytheon Technologies (RTX) - Get Free Report was terrific. It still is a good chart but why did Northrop Grumman (NOC) - Get Free Report, Lockheed Martin (LMT) - Get Free Report and General Dynamics (GD) - Get Free Report do so much better? Significantly better. For now I will stick with it but if it breaks under around $75 I will give up on it.
Royal Gold (RGLD:Nasdaq) has reached its first target (and resistance). I would like to see it stay over this $115 area. It’s going to take a lot to eat through all that resistance, so I’d be in favor of selling a little bit here and making sure it didn’t fall much under $115 after that. If it can do that it should make its way to the mid-$120s.
Our old friend VMWare (VMW) - Get Free Report finally, after all this time, broke out today. It is at the first target, which is that spike high from last summer. If it can get through there, then I can measure something in the $175-$180 area. I think there is nothing wrong with taking some off the table here and hanging on to some.
I was asked for the target on Bristol Myers (BMY) - Get Free Report and it’s clear the first target should be around $66, where the old high is. I do not think the stock is going to zoom on upward like a technology stock, but I look at how it has gone sideways for so long and I think with a bit of work over the ensuing weeks or so this could turn into one giant base. If you have the patience I’d stick with it, even if you want to sell a little near resistance.