Skip to main content

Return of the Either/Or Market

Mega-cap tech sat today out for the most part, providing fuel for everything else. Let's check the indicators and statists -- and lots of stock charts.

The Market

Note: I am taking the remainder of the week off to go celebrate my mother’s 85th birthday with her. Perhaps she will have some pearls to share with me about the market that would be actionable. The next issue of 'Top Stocks' will be Nov. 7.

We did get the first of the month seasonality of an up day, but more so, a day where breadth does great.

That has pretty much been the pattern all year. We’ll get to the chart of the Russell 2000 later, but let’s just review some of today’s statistics. Also, in case you thought the either/or market was gone, it isn’t. Mega-cap tech sat today out for the most part, providing fuel for everything else.

The number of stocks making new highs on the New York Stock Exchange fell short. There were more than 200 by a slight margin, but still fewer than last Monday. So, we’ll take that as a partial win, since at least there were more than 200 new highs there.

It was on Nasdaq that the new highs were so impressive as they topped 300 for the first time since May.

Image placeholder title

Of course breadth was good, so that takes the cushion for the McClellan Summation Index to negative 1,800. That means that as long as net breadth (advancers minus decliners on the NYSE) doesn’t show more than a net negative 1,800 that indicator remains pointing upward.

Then there is the chart of the Russell 2000 fund (IWM) - Get Free Report. It finally got back to the old highs. It is my opinion that as long as breadth is OK, the Russell 2000 is OK (and the market in general). What bothers me is that it feels like the whole world sees it and I hate it when there is something so obvious in the market.

Image placeholder title

That brings us to sentiment. The daily sentiment index for the VIX slipped to 13. Nasdaq held at 87 and the S&P picked up a bit to 83. Thus there is nothing extreme there yet. If it gets extreme, I would expect a bout of volatility to show up.

New Ideas

I find myself staring at the chart of Goldman Sachs (GS) - Get Free Report and wondering if it can breakout over $420. If it can, it would be a nice breakout.

Image placeholder title

Several of you have asked for a follow up on Arrival (ARVL:Nasdaq), which I wrote up in the "Feedback" section a few weeks ago. There are two targets. One is right around here, near $18. That bottom that broke out from $14 measures to $18 and you can see this downtrend line is here. There is another target near $20, which is that gap fill from June. The stock is a little overbought here so if it can’t get over $18 quickly it probably means another dip before it makes a try for $20.

Image placeholder title

Today’s Indicator

The 30-day moving average of the advance/decline line is finally a little bit overbought. It is not an extreme, though.

Image placeholder title

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.

I want to make a comment about all these charts below since there is a common theme: resistance overhead. This is the time of the year that tax-loss selling tends to ease in late October and resurface again in December and these would all be candidates for that (for example, a bounce, but likely run into resistance).

That line on Pinterest (PINS) - Get Free Report is about the only reason I can find that it should rally from here. If it does rally from here, then that $50-$52 area is the first serious resistance.

Image placeholder title

Snap (SNAP) - Get Free Report has left an island overhead, all the trading from August to October. To me, that means it could/should see another bout of selling as we head into year end. In the meantime, $50 looks like decent support for now.

Image placeholder title

I would say Microvision (MVIS:Nasdaq) will run into some trouble around $10 and if it can get through there there is another decent layer at $12. It would have been more bullish if today’s rally had left an island down there (from Friday’s gap down).

Image placeholder title

Joby Aviation (JOBY) - Get Free Report is trying to hold, although I see so much resistance starting at $10 that it is hard to believe it can power through that area handily. It is possible it’s making a funky head-and-shoulders bottom, so I’m inclined to give it a chance as long as it stays over $8.50.

Image placeholder title

Twitter (TWTR) - Get Free Report has become a serial disappointer in 2021. What it desperately needs to do now is get back up and over $55 to recapture the line. There is a lot of work to be done as resistance is strong overhead, especially at $58-$60.

Image placeholder title

The good news for Paypal (PYPL:Nasdaq) is that the top it broke down from measures to $230 or so, which is where it is. There is also support around $225. So I’d look for a bounce shortly. But there is no base for me to speak of or to hang a hat on.

Image placeholder title
What to Watch as We're Overbought

What to Watch as We're Overbought

Let's take stock of the indicators and see what's ahead -- also a look at Cleveland-Cliffs, Southwest and several ETFs.

Rounding Up the Herd

Rounding Up the Herd

We're seeing a turn toward bullishness. Now let's see what happens when the consumer price index lands.

A Win-Win-Win for the Nasdaq

A Win-Win-Win for the Nasdaq

The exchange is working on a winning streak, so let's see if we get a pattern-changing trend. Also, let's check gold, the overbought forecast and Under Armour.

A Win-Win-Win for the Nasdaq

Believe in the Resistance

We learned a few things from Monday's action -- one of them is that resistance still matters. Let's check the market internals, breadth, and ... silver.