It’s happening! You can feel it in the air. What am I referring to? That folks feel better -- a little bit better -- today than they felt yesterday.
Why? Well breadth was better of course. I wouldn’t get carried away but at +500 on the NYSE it is the best breadth since last Thursday. I would like to think we get a bit more of this in the next few days. We need some better breadth to lift that Overbought/Oversold Oscillator of mine. If you squint hard enough you can see it ticked up today, which is the first uptick in almost a week.
Good breadth, or at least not crummy breadth, in the next few trading days will get this Oscillator to move up, getting it to an overbought condition sometime next week—early July.
As for folks feeling better, let me show you Exhibit A: the Investors Intelligence Bulls. At 59.6% they are the highest since April. Isn’t that a sign that folks are feeling better? Two weeks ago this was at 54% so yes there has been a shift.
Now let’s see if the NAAIM folks have reinvested that which they sold a week or so ago. I am not as confident, but we’ll see tomorrow.
In any event, know that the S&P is now up for five straight days, something it hasn’t done since early March. If it is up again Thursday and/or Friday we will be staring at 7 straight days and that would mean even folks who calculate their oscillators using price (mine is using breadth) will see it as overbought next week.
I am still of the mind that in early July we will see a market that is overbought with too much bullishness. The next two days could help that set up. Keep in mind tomorrow is the first day of the new quarter and Friday is the Employment number.
I would like to address the chart of Boeing (BA) - Get Free Report because it’s had a crummy week and I have been a fan of the chart for a while. I would like to think this $235-ish area will hold but if I am wrong and it breaks with any oomph -- oomph meaning you have to be able to see it break those thick lines -- then I would consider I am wrong.
The Volume Indicator is at 50%. An oversold reading is mid 40s.
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The wild thing about the chart of Pan American Silver (PAAS:Nasdaq) is that two months ago this pattern was up at the top of the page and now it’s at the bottom of the page because we dropped off the rally that took it to the upper $20s level. That means from a risk/reward it’s a decent buy here because if it turns south and goes under $28 with any oomph you know you’re dead wrong. There’s just a lot of resistance all the way up.
Last week we had a discussion about GLD and how low the DSI had gotten (16). I was waiting for a single digit reading but, in the meantime, I was asked about GDX, an ETF to own the gold stocks. It is quite possible this is a head-and-shoulders bottom. I do not know what level says we’re wrong but with the DSI on the low side for gold I’m inclined to think GDX rallies at some point in the next few weeks (off this blue line).
Astrazeneca (AZN) - Get Free Report has had a good run since we last checked in on it. It still has an unfulfilled upside target in the mid $60s. I’ll call it a hold because it’s hard for me to get excited about buying a stock that is up so much already. In the drug space I still favor Merck (MRK) - Get Free Report and Bristol Myers (BMY) - Get Free Report.