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Speculation Day

The biotechs, pot and all the speculative stocks had a great time on Wednesday, but behind the smiles could be a continuing correction.

The Market

Well that was an interesting rally. Because it was different. All the down-and-out stocks that have been crushed instead rallied today. That means the biotechs and all that speculative stuff had a great day. Electric vehicles, pot, SPACs. And that is different. Because of that, breadth was the best it has been since April 1. Upside volume on the New York Stock Exchange was 87% and for Nasdaq, it was 89%, which is the best showing since Jan. 4. That’s a long time. I’d call all of these good signs, but I can’t say it changed any of the indicators.

Sentiment, which had begun to get a bit sour on Tuesday afternoon -- thus my view that we ought to rally -- is now right back to happy. The Investors Intelligence bulls are still at 64%. The put/call ratio, after having gotten a little bit higher on Monday and Tuesday, slipped right back to .71. Having come all the way down from those readings at 90 and 91 respectively for the S&P 500 and Nasdaq, the DSI had slipped to the low 70s for both. It is now 79 and 78, respectively, so there is a little room to move them up again. I still don’t think this correction is quite done yet.

New Ideas

I would like to revisit the chart of iShares MSCI Emerging Markets (EEM) - Get Free Report, an exchange-traded fund for the emerging markets, because I drew this potential head-and- shoulders bottom in earlier this month and it hasn’t done anything but go sideways. I do think if it can get over $55, it gets much better, and others will start to like it. You know, the way everyone now likes the drug stocks that we liked months ago.

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I also want to follow up on iShares Nasdaq Biotechnology (IBB:Nasdaq), an ETF for the biotech stocks. I recommended this chart about two weeks ago when it was coming off that lower line and now it is at the upper line. There is a lot of resistance all the way up, but obviously crossing $155 will help. Yet, I want to make clear that if this turns south and goes back under $150, I will consider myself wrong and I will exit the trade.

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Finally another follow up with Air Products (APD) - Get Free Report, which I have now written up positively several times recently and it still hasn’t done a thing. If it can get over this resistance line around $290, it really ought to make a try for filling that gap overhead near $305.

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Today’s Indicator

The Volume Indicator sits at 51%, it can’t seem to go up or down.

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Q&A/Reader’s Feedback

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Evolus (EOLS:Nasdaq) is not my kind of chart, but we have an awful lot of stocks that look like that today, so I’ll just note that it’s OK, as long as it stays over $10. Under $10 and I think it fills that gap below near $7-$8.

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Oncternal Therapeutics (ONCT:Nasdaq) looks pretty neutral to me. Having just fallen hard from a high it bounced off support, but has now left resistance overhead. Yet that resistance is not particularly heavy. I can see the stock just trading in a wide range ($5-$10) for a few more months before a pattern develops. That gap fill near $8, should it occur, would be some short-term resistance.

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Axsome Therapeutics (AXSM:Nasdaq) has a measured downside target near $45, so at least it is closer to the target than when it broke $65 a month ago.

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CVR Partners (UAN) - Get Free Report looks like a stock that goes up, corrects sideways and then goes up again. Seems to me as long as it doesn’t break that uptrend line then the uptrend remains intact.

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I don’t like that big decline in Live Oak (LOB) - Get Free Report from Tuesday, only because it wiped out the entire month of gains in one day. But aside from that if the stock falls toward that $60 area I’d say it’s probably OK again down there.

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I am not terribly fond of the way Utz Brands (UTZ) - Get Free Report traded today, because it tried to break out and couldn’t. One other issue is that a breakout only measures to $28-$29, so the runway is a bit short. I’ll call it a hold with the hope that it at least gets itself back up over $27.

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