Today was the same as yesterday. There was no selling pressure. I’m not sure there was much buying, either, outside of the usual suspects, but the lack of selling seems to be the theme.
I am discussing it because typically sold out stocks (lack of selling) gives way to buying opportunities, but so far that has not been the case. Instead they just languish, unable to break, unable to rally.
Take the chart of United Airlines (UAL) - Get Free Report which we have looked at a few times of late. It’s had bad news on top of bad news and still it doesn’t break down under $30. Usually a set up like this is perfect, as a stock gets sold out – or doesn’t go down on bad news – and then gets a piece of good news and it rallies. And a reminder: I think as long as the stock stays over $30 it should eventually rally. But all we get now is that it simply doesn’t go down and when the market rallies, it still sits there.
Tuesday night we looked at JPMorgan Chase (JPM) - Get Free Report, which is the same issue. Or we can go back to the chart of the small cap Russell 2000 fund (IWM) - Get Free Report, which hovers at that uptrend line, refusing to break and bouncing off it with lethargy rather than oomph. I would turn much more positive on the market if these stocks that are sold out would find some buyers to give them oomph. It would also help breadth, which continues to lag.
Away from that, the only change in the indicators is that the Investor’s Intelligence survey this week shows bulls at 57.7% which is the highest reading since late January when they were at 59.4%. Readings over 55% are yellow flags. Over 60% and the flag turns red.
Finally, the DSI helped us with the down day on Tuesday so I must report that Nasdaq is back at 87 and the S&P is back at 85. Another up day or two and they are likely to be back over 90, which is why the runway feels short to me.
I want to start with two follow ups. The first is Palo Alto Networks (PANW) - Get Free Report, which I was asked about several weeks ago and I was in favor of taking a profit if it popped to $240, which it did and then it corrected. I missed the lows at $220, but I want to point out that it is in a better spot now than it was then, because it has had that six-week correction; $250 is resistance for now, but the stock is in better shape to eat through it.
The other follow up is Workday (WDAY:Nasdaq), which I have liked for about a month, and it has gone up, but it has done so like it’s dragging a weight with it. But now it finally got to (almost) $200, and if it can ever break out, it really gets better.
Elsewhere, and not in tech land, Capri (CPRI) - Get Free Report is one of those down-and-out stocks that looks like it is getting sold out and should rally. If it stays over $15, it should get a chance to rally. I would not hang around if it doesn’t rally soon, though.
The Volume Indicator is overbought.
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Etsy (ETSY:Nasdaq) hasn’t done anything wrong. It met its measured target when it got to $95 to $100, so now I see nothing to do here. If it pulled back to the around the $90 area, it would get interesting on the long side.
There was a time when I was asked about Budweiser (BUD) - Get Free Report and preferred Molson Coors (TAP) - Get Free Report, but now I prefer BUD over TAP. If TAP can recapture $36, I’d be happy to call this a false breakdown, otherwise, a break of $34 and it will look like a new leg down into the $20 area. Even Boston Beer (SAM) - Get Free Report has managed to rally to a new high.