The sideways chop continues in the major indexes. But the improved breadth continues, as well. The McClellan Summation Index keeps on rising. The chart is shown below.
I know: You can’t find it in the big-cap stocks. You can find it in much of the speculative stuff that was hot back in January and February, but if the market is going to do this constant group rotation, then they must eventually rotate into that stuff, too. And Nasdaq had its first three-day winning streak since April. That’s a change. Yet, I can tell folks are frustrated. What had been working for April and part of May has stalled out and is no longer working. What had worked in the rally off the late May lows has stalled out in recent days, as well (see the Semis). And breakouts have had very little follow- through.
That’s the market we’re in. I think it is unlikely to change. At some point sentiment, which has bordered on giddy but hasn’t quite gotten there, will get there. At some point breadth will weaken and will cause the indicators to roll over. Right now we have a market that is short-term overbought, and I think that’s why we see what feels like the never- ending chop.
With Prime Day coming later in the month, I was asked if I thought today was the start of a move up in Amazon (AMZN:Nasdaq). Prime Day or not, Amazon has gone nowhere for almost a year (this is a nine month chart). It is the same price it was in September, so I’d say as long as it holds over that $3,150-$3,200 area, I see no reason it can’t work its way upward, especially if it can get over that top line (around $3,300).
Finally, I was asked to follow up on IBB (IBB:Nasdaq), an exchange-traded fund for biotech stocks that I have liked for some time and finally—thanks to the Biogen (BIIB:Nasdaq) rally yesterday. I would be inclined to take some profits here. I think it can breakout over $160, but when the market gives you a gift you should book some profits on a portion.
The McClellan Summation Index is discussed above.
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Five9 Inc (FIVN:Nasdaq) looks like a big top to me. But if you want to buy it down here then at least you know exactly where you are wrong: under $150.
Tradeweb Markets (TW:Nasdaq) hasn’t done anything wrong, but it has been going sideways for two months. I would respect a breakout in either direction, but I’m not so sure it is going to break. Right now it is smack in the middle of the range.