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Keep an Eye on the QQQs

Here's why I'm watching the Invesco QQQ and Nasdaq's new lows.

The Market

We’ll begin with the chart of the Invesco QQQ (QQQ:Nasdaq), because that has been the chart to pay attention to as you know. We bounced off the lower line, and I have not drawn in the upper line, because it is far away. I think the spot to watch now is $268-$270. Failure to get over that in the next few days matters.

Why does it matter? Because that channel that we’ve been watching is much higher and if the QQQs cannot get up and over this flat resistance line, then that tells me they want to retest the lower line.

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I will also be watching the number of stocks making new lows for Nasdaq. As you know it has been up, but recently was going sideways when using a 10-day moving average. If the mega cap tech names rally and leave everything else behind, this chart would become much more problematic.

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As you can imagine, the statistics for Thursday were not great and, in fact, were pretty crummy. But the stocks that move the indexes held up well. The big highlight was the PHLX Semiconductor Sector (SOX:Nasdaq) made a higher high and the Transports closed green.

I feel compelled to point out that the Daily Sentiment Index (DSI) for the bonds is now at 80. This rarely gets much under 20 or over 80. This $172-area on the iShares Barclays 20- plus Year Treasury Bond (TLT:Nasdaq) is a resistance area (black line). The blue line ($167-$168 is support). If the bonds turn south it would be of note. If they break out it would be headline grabbing.

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Finally, the DSI for the Dollar Index has made its way to single digits. I’ve been waiting all week for that and it is now 8. With tomorrow being Friday, we probably don’t get a change in direction but by early next week I’d look for an oversold rally in the buck.

New Ideas

I am terrible at chasing stocks that are up already, so I am never going to dive into the mega cap tech names now. But I would remind you that Lumentum Holdings (LITE:Nasdaq) continues to be a good long term chart. I think that old high around $93 will give it a bit of trouble but the stock continues to make good progress without much fanfare.

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I am still waiting for Palo Alto Networks (PANW) - Get Free Report to make a move through resistance.

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Finally, for those who have been looking for buy Intel (INTC:Nasdaq) for an oversold bounce it finally stopped going down today so perhaps it is due a bounce now.

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Today’s Indicator

The 21-day moving average of the put/call ratio for exchange-traded funds is just over 1.0. Another day or two and it should be underneath it.

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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 for an upside target on Kimberly Clark (KMB) - Get Free Report and the near term one is around $155. It’s possible to get a longer term one near $165, but let’s first see if it can tag that $155 area that I have highlighted. It’s been quietly under the radar.

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I don’t much care for the chart of Uber (UBER) - Get Free Report, because it’s just one of those drifting lower names. They typically drift lower then when there is enough negative sentiment it pops and then drifts lower all over again. For now I’d say it probably bounces off $28-$29, because it will get oversold down here. Should it break $28 with any oomph that would be a negative for the stock, especially if the market as a whole breaks.

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There was a time I liked PayPal (PYPL:Nasdaq), because it was breaking out of a big base, but I only had a measured target in the $160s, so I clearly was not bullish enough. The stock has done nothing wrong, but I am not very good at chasing. The two things I would be cautious of would be either a gap down leaving Thursday’s trading as an island or a break of the uptrend line. Otherwise, call it a hold.

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I find myself drawn to Ryman Hospitality (RHP) - Get Free Report, because it is rounding under. But how many charts do we have like this that look so enticing and then deliver nothing but more sideways or slippage? The curious part is that it is a real estate investment trust with no yield. If it trades under $30 in a meaningful way I’d probably give up on it.

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