So we got the rally. Statistically it wasn’t great, but how well the big names that report later in the week hold up will determine the length of that bounce off the lower channel line in the Invesco QQQ (QQQ:Nasdaq). I don’t like to game earnings – and with the major movers of the QQQs reporting late this week – that’s what will happen if I try and determine in advance where they will go.
Instead, I want to show you something. I have been complaining about the number of stocks making new highs on Nasdaq for weeks now. Relative to earlier this year, they are terrible, but my complaint has been relative to where they were in June. They just stopped expanding. You can even see Monday had fewer than 100 new highs. That’s just not a great broad move.
Now look at the New York Stock Exchange. Like Nasdaq, it is far below the readings early in the year, but notice it is holding its own in this 100 area, even during these last two weeks of rocky roads. I think it means the NYSE stocks are in somewhat better shape than Nasdaq.
We should also talk about the dollar. I mean, it’s now on everyone’s hit list. There are calls for a lower dollar everywhere. The Daily Sentiment Index (DSI) for the buck is at 11. Should the dollar fall again Tuesday, it really ought to get to single digits and to me that means we are close to a countertrend rally in the buck.
An exchange-traded fund used to trade the U.S. Dollar Index, UUP (UUP) - Get Free Report, gapped down today. If it gaps up over $25.50 Tuesday, it would leave Monday behind as an island, much the same way it did so in early March. I can calculate a downside target around $24.75, but no matter how it comes about, I think we’re getting overdue.
One final point, the euro is the largest component of the Dollar Index and its DSI got to 91.
The flip side of this is that gold’s DSI finally got back up over 90 after that dip last week. I am still a fan of gold, even thought it has gone beyond my $175-$176 target, however, I really think it is overdone up here. It needs a correction or a sideways digestion.
A few months ago I was a fan of Alcoa (AA) - Get Free Report, but when it got to $12-$13, I thought it had gone far enough. It has since spent the last six weeks correcting. If it can get up and over $14 that would be a big plus for the chart.
The 30-day moving average of the advance/decline line is not oversold.
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I don’t know what to do with Exxon Mobil (XOM) - Get Free Report. First of all, is because you’re getting in front of earnings on Friday. But second, and more importantly, because it doesn’t seem particularly interested in rallying or in breaking down. To improve, XOM would have to rally over $45, but then it gets stopped at $47-$48. To break down, it has to crack $40 like it means it. So at $43, change it basically sits there.
Parker Hannifin (PH) - Get Free Report has me tempted, because if it can cruise through $190, it can make an assault on the prior peak at $210. If it trades under $180 then I’m not interested. Earnings are out next week.
My old friend Kimberly Clark (KMB) - Get Free Report finally broke out on earnings last week and has been consolidating ever since. As long as it stays over $145, I like it. The next target is in the $153-$155 area.