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Nothing Was Stirring, Not Even a Market

A quiet day, but there's something odd about breadth of late...

The Market

Note: The next “Top Stocks” will publish this weekend; I will then return to my regular schedule Jan. 2.

Monday was so quiet in the markets that I managed to eat a third a pint of ice cream. Slow market days are definitely not good for my waistline.

Breadth was fine, which keeps the indicators heading up, even if they are short-term overbought. I mean, nine straight up days for Nasdaq is uncommon. To think, exactly a year ago, so many were under their desks and CNBC was regularly doing “Markets in Turmoil” coverage.

Exactly a year ago, the 10-day moving average of the put/call ratio was over 125% (green arrow). Monday it is back at 86%. What a difference a year makes.

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What strikes me is not so much the sentiment, because the longer we go without a down day or a pullback, the more everyone starts looking for one. What strikes me is that we have now had 14-straight days of positive breadth and only three of them are in the quadruple digits.

Let me share with you how unusual this situation is.

Coming off the December low last year we had 12 of 13 days with positive breadth. Seven of those positive days had breadth that was a net over positive 1,000 issues.

Seven weeks after the December low, in mid-February, we had another good run for breadth. We went eight of nine days with positive breadth. It was later in the rally, but there were three days — out of nine — with quadruple digit readings.

Since the early October low, there have been six days with breadth at positive 1,000 or more. Doesn’t that sound odd to you? That’s fewer than once each week. It’s not bearish, but it certainly is a huge change in the character of the market. I don’t know what to make of it, but it seems odd.

On an intermediate-term basis, we get back to an overbought reading (using the 30-day moving average of the advance/decline line) midweek during the second week of January. It’s hard to imagine we won’t have a pullback for two more weeks, but it surely is something to pencil in the calendar.

Wishing all who celebrate a very Merry Christmas! And a very Happy New Year to all!

New Ideas

I’m starting to feel as though I am harping about SPDR Gold Shares (GLD) - Get Free Report, but it keeps inching up. I began to warm up to it about a month ago and it hasn’t done much. I’d love to see it over $140 with some oomph. In fact, I would love to see it map out as I have drawn in. Think the general pattern, not the exact prices. I think January could be a good month for GLD.

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For the question about Ulta Beauty (ULTA:Nasdaq), it is still trying to curl under and complete this correction off the earnings gap up. The pattern is intact.

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Today’s Indicator

The 30-day moving average of the advance/decline line has not been a great tell in the last few months. It was overbought in October and oversold in November. But it has been oversold in December and that has been a good match with the market.

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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.

Since Tesla (TSLA:Nasdaq) has finally tagged the infamous $420 level, I was asked if there was a measured target for it. If we take $340, which is the high of the pattern and subtract $180 we get $160. If we add that on to the breakout at $240 we get $400. Now, some might say that the breakout was the flat line (blue) and so we are at the target of $420.

If I take a longer term of three years, the chart then the target becomes something closer to $580. But for now there is a measured target near here. The stock hasn’t done anything wrong yet.

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Nektar Therapeutics (NKTR:Nasdaq) is one of those small bases I tend to like. It broke out and came back to test the breakout. The little base measures to $26 and the gap fill is $28. I’m a fan as long as it stays over $20.

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Fiat Chrysler (FCAU) - Get Free Report is in a deal to merge with Peugot and quite frankly while the chart is good the base measures to $16.25, which was achieved on that big spike in early November. It probably rallies again, but I’m not sure it will surpass that high.

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