The question of the day for me was this: Is this week a change in the market? My answer is the same as it has been for weeks: The indicators have not changed. For weeks I have noted that we were a little bit short-term overbought, but not yet intermediate-term overbought. As of this past Monday, we moved to maximum short-term overbought and we had quite a nice pullback. It hasn’t relieved the entire overbought condition yet, but if we come down again in the next couple days, we’d probably have worked it off enough.
So could we then rally again next week? Sure.
It is still too soon to tell, but if we rally from now to next week into early May, we might— emphasis on might — have the short-term and intermediate-term overbought at the same time. Much will depend on how the market trades in the next two weeks.
Let me point out that we got a little bit overbought in early April. Would it surprise you to know that on April 9, the S&P closed at 2789? It closed at 2799 one week later on April 16. Here we are one week after that and the S&P 500 closed at 2799. So, if you feel as though we’re doing a lot of chopping, we are.
But back to the indicators. Breadth today was incredibly mediocre. At positive 1,200, it lagged in a big way. So while I praised breadth on the down days, it is hard to do so on the up days. However, it has not been weak enough to roll over the McClellan Summation Index. That would take a net differential of negative 1,300 advancers minus decliners. And let me point out that typically this indicator rolls over before the indexes care.
The Summation Index rolled over in mid to late January. The major indexes kept going for another month or so. My guess is we’ll end up with that type of divergence as this rally tops out, but we’re just not there yet.
On the sentiment front, the Investor’s Intelligence bulls rose a bit more to 43.3% and the bears fell a bit to 30.8%. I consider these readings to be neutral now as the fear factor has worn off from those extreme readings we had in mid to late March. Insert bulls here.
The put/call ratio is likely going to get more interesting in the next week or so as well. Wednesday’s reading was still relatively high at 91%, but the 10-day moving average is falling hard. It has shown no extremes yet, but there is clearly a bit more acceptance of the rally.
So for now, the indicators have not changed. I will continue to monitor them for signs of rolling over.
I wrote up CyberArk Software (CYBR:Nasdaq) about a week ago on the positive side and it has rallied a bit to resistance. Now, if it can only get through that resistance it ought to get near 100. The 90/100 rule is in effect now: 90% of the stocks that go to $90 will go to $100. Remember that means 10% won’t. Also, the company is expected to report next month.
The Volume Indicator is at 49%. If it gets to the mid-$50, it gets overbought. This is an intermediate-term indicator.
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.
Our old friend Zoom Video (ZM:Nasdaq) has had quite a run since January. And of course, now everyone is on to it. However, it has had a decent correction, so if it can crack through that downtrend line it probably runs into a little trouble at that late March high ($161-$162), but that’s 10 bucks from the breakout.
Everyone is talking about the big breakout in iShares Nasdaq Biotechnology Index (IBB:Nasdaq), to be long the biotech stocks. It broke out and immediately came back I would like to see it come back to fill that gap just under $120, but I think it makes another attempt at a rally. Then we’ll see if it can surpass last week’s spike high at $128. The best thing would be if it went sideways for a few weeks here since I think that would give it the oomph to set up higher.