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Not Much Is Moving ... Except This Indicator

While Thursday saw little change underneath the surface, the put/call ratio jumped, so let's take a closer look.

The Market

I would like to report that some of the indicators changed Thursday. But I cannot. I believe we’re still working off that short-term oversold condition we reached on Tuesday.

There is one indicator, however, that was a bit of an eye-opener. It was the put/call ratio, which came in at 110%. That’s really quite high for a day when we did absolutely nothing. Perhaps it’s because of the anticipation of the Employment number tomorrow or the big tariff deadline looming a week from now, but I consider that high.

I would like to once again revisit the chart of iShares Russell 2000 Index (IWM) - Get Free Report relative to the SPDR S&P 500 exchange-traded fund trust (SPY) - Get Free Report, because try as it might it, it hasn’t crossed that downtrend line. Should that change, I think sentiment would get quite giddy again. My preference would be for the markets to retreat again and the Russell to outperform, so even in a decline – perhaps next week? – this may cross the line, while no one is paying much attention.

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The other chart I’d like to highlight is the chart of the Transports. It is oversold enough to rally, but in the last two days it has not rallied much. If I am wrong and iShares Transportation Average ETF (IYT) - Get Free Report cannot rally and instead breaks under $188, I don’t care that everyone thinks the Transports don’t matter, they do. They always have. Even at the height of the dot.com boom when they underperformed and I complained I was told they didn’t matter in the age of the internet. Turns out they were an early warning signal; they mattered.

So again, they are oversold enough to rally. If they cannot it’s a problem.

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New Ideas

Sticking with the theme of the Transports, the chart of FedEx (FDX) - Get Free Report has got to hold this $150 zone. Should it break, the Transports will break down as well.

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We looked at Baidu (BIDU:Nasdaq) a few weeks ago with an eye toward buying a dip. The stock is in the process of forming a small “W” pattern. Even if it came down to $110 to fill the gap, I’d think it was OK in the intermediate-term. That’s a base it is developing.

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Today’s Indicator

The 10-day moving average of the equity put/call ratio has finally started to lift off the bottom. I would consider the indicator bullish if it were at/near 70% instead of the current 60%.

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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.

The lock up expiration for Chewy (CHWY) - Get Free Report is Dec. 11, so there could be some selling associated with that date. But it is trying to form a small bottom and if it crosses this downtrend line, it changes the pattern from down to “maybe.” I’d love to see the pattern develop as I have drawn in blue.

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Today must be “2019 IPO Day” for questions, because this next chart is of Peloton (PTON:Nasdaq) which has had quite a week in the news. With the caveat that there is not much history to hang our hat on, that little base measured to around $34, so I would say it got over extended and is correcting. There are two schools of thought on the pullback.

The first is a 50% retracement comes to $29. The second is a retest of the breakout. I always prefer a retest of the breakout, but my guess is there is a bounce from around $29, since there is light support there. But the chart will have to set up another pattern for me to warm up to it.

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Pan American Silver (PAAS:Nasdaq) finally broke out and has a next measured target in the $22-$23 area. Obviously a pullback toward $19 would be a good spot to buy it, since I am terrible at chasing.

I would point out that VanEck Vectors Gold Miners exchange-traded fund (GDX) - Get Free Report crossed the downtrend line (black) but has not yet officially broken out over the blue line so this one continues to interest me on the long side.

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