Today was yet another day of interest.
While I realize it wasn’t until the last couple of hours that the market started to ramp, we still had quite a few statistics of interest.
Breadth was terrible for a day the S&P 500 was up. But the Russell 2000 was down again. The number of stocks making new highs was fewer than even yesterday and Nasdaq’s new lows expanded a smidgen. New York Stock Exchange upside volume was 47%. Nasdaq, where all the action was chimed in at a mere 52%.
But today the transports, semiconductors and banks joined the "red" team and did not participate. Yet, several of the stocks that are growth stocks, but non-FANG, finally moved (see Shopify (SHOP:Nasdaq) and Workday (WDAY:Nasdaq) as examples). That’s the either/or market still hard at work.
We have had plenty of strong economic data and the bonds refuse to go down (rates up) anymore. But while no one noticed this a month ago when that DSI for bonds got to single digits, now everyone sees it. The big level for the 10 year is $1.60. For iShares Barclays 20-plus Year Treasury Bond (TLT:Nasdaq)it’s $139. A move up through $139 would probably be tough for the small caps and the banks.
Today is the day Nasdaq’s Momentum Indicator is overbought. The intermediate-term will reach an overbought at the end of the week. Timing-wise, I’ll say we’re getting closer to the "latter part of the month," and closer to the intermediate-term overbought reading.
The one good thing is that despite the weak breadth, the McClellan Summation Index has not yet stopped going up. It will take a net breadth reading of negative 400 (advancers minus decliners on the NYSE) to halt the rise. The chart is shown below.
Finally the DSI for Nasdaq backed off yesterday (of course, Nasdaq was red on the day) but is back to 90 and the S&P is at 89, while the Volatility Index is at 10. While I still think the rest of the week can be choppy, I think the set up for the latter part of April is still for a pullback.
With the market getting overbought, I hesitate to bottom fish, but so many are so upset with the biotechs and yet iShares Nasdaq Biotechnology Index (IBB:Nasdaq) seems like a decent risk/reward here. You know you’re wrong if it flops back under around $143, but maybe it rallies and the last two months were just a giant correction.
I was asked to follow up on my old friend Skyworks Solutions (SWKS:Nasdaq). I am still a fan and I would love to see it get up and over that resistance line. I wouldn’t bail on it if it breaks under $185, because that uptrend line is solid support, but it would make me feel better if it holds above it.
The McClellan Summation Index chart is below:
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Tesla (TSLA:Nasdaq) finally broke out and should be on its way to the $800 area. There is a little gap fill between $770 and $780 that might stop it, so I would probably take a little off the table there.
Jinkosolar (JKS) - Get Free Report should over the longer term make its way down to that support in the $20s, but that top it broke down from measured to $35-$40, so I suspect it is oversold enough to rally. If it can’t get over $40, then I’d start looking for another move down.
Diamondback Energy (FANG:Nasdaq) is enjoying a mild correction after a torrid run. As long as it stays over $70, that is all it looks like to me: a correction. In fact, I like it here with a stop under $70.