I have some really wild statistics for today's rally.
Let me begin with the Nasdaq. On Monday, we looked at net volume (up volume minus down volume) on a day when the index gained 29 points; we compared it with the prior rise of 29 points last Thursday. On Thursday, we got net volume of +1.2 billion shares, compared with a net gain of 830 million shares on Monday. Today's 27-point gain gave us a net of 500 million shares.
Each push higher has come on lighter net volume. Is that a problem? It is not a problem now, but it ought to become one if we ever sell off again.
Then there are stocks at new highs. In mid-January, almost 260 stocks reached new highs on the Nasdaq. On Monday of this week, there were 228 new highs, and today, just 138. Again, for now this does not matter. But all of this tells us the Nasdaq is not sharing the wealth, so to speak; it is getting narrower.
Finally, the International Securities Exchange equity call/put ratio chimed in at 284%. Typically, a reading over 200% is noteworthy and often leads to at least a one-day whack. So to get a reading of almost near 300% is unusual. The last peak over 275% came on December 17, 2012. If you squint, you can see we actually corrected before pushing higher once again. In fact, the very next day the S&P 500 was up 1%. Then it fell 3% in the next week.
Readings of 265% and 255% were recorded in the fall of 2013. They did not lead to the same type of immediate downside, but each provided some. If nothing else, this indicator is telling us the market has finally gotten a bit frothy out there.
I do not yet see a reason to be bearish -- breadth continues to make new highs and the McClellan Summation Index is pushing higher. But the froth we're seeing now was missing before, so I suspect we are not quite done with the chop effect.
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Perhaps I need my head examined, but I keep looking at the Microsoft (MSFT:Nasdaq) chart and wondering if it can get over that $38.50 area. No one talks about it, and yet I hear an awful lot of praise for the company's Surface tablet. Use a stop under $37. The target would be in the low $40s.
The question "what about the coal names?" has come up. Arch Coal (ACI) - Get Free Report rallied right to the downtrend line today. If it can have some follow-through, then the chart measures up to the $5.30-$5.40 area from this base.
The ISE equity call/put ratio is discussed above. Here is the chart.
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From a longer-term perspective, Atmel (ATML:Nasdaq) bounced off support and therefore is OK. But I do not like when charts are so V-like. I prefer some sort of rounding under or a W formation. So while the chart is not negative, I lean toward being neutral on it. The base measures to $9-$9.50, so there is still room on the upside. But there are nicer looking bases out there. If this comes back to retest the $7.50-$7.75 area, I would suggest that you be more interested.
Standard Pacific (SPF) in the building area (yes, another "homie") has a nice chart with a target of $9.75-$10. I have no issues with it. But you might want to wait a few days to buy, since these stocks probably need some consolidation; they have had quite a run this week and feel a bit stretched at the moment. You would not want to see SPF trade back under $8.65-ish.
I vacillate on Colgate-Palmolive (CL) - Get Free Report every day when I hand-post the chart. One day I think, OK it is going to break down. And the next day I think, no, it is going to hold. For now, I would say that if it can get over $63, then it is more likely to get saved. A break of $61 would send it clearly into the negative pile. It is almost as if stocks like CL and Procter & Gamble (PG) - Get Free Report are suspended in air and unsure about whether to grab onto the rope and save themselves or to let go and fall apart. If I see something in the coming days, I will note it, but for now the stock's direction is a coin toss.