Well, at least the market finally moved!
And with that comes changes in some of the indicators.
The McClellan Summation Index had finally ticked up on Wednesday, and with Thursday’s breadth, it pushed up a bit more, so at least you can see the uptick now.
I must note, however, that breadth was better on Wednesday’s rally where the S&P was up nine points and the Russell flat than it was during Thursday’s rally in which the S&P 500 was up 27 and the Russell tacked on 1%. But, overall, breadth has been good. So, unless and until it falters, it gets the benefit of the doubt.
Then there are the number of stocks making new highs. The New York Stock Exchange is still lagging a bit since it had more new highs last summer and Thursday took it to the same level we saw on Nov. 4. That date is when the Russell 2000 started heading down. But Nasdaq’s new highs nearly doubled from the prior day. This is now the most we’ve seen in a year.
Here, too, I must throw a little cold water on the situation, since the number of stocks making new lows for Nasdaq increased enough to tick the 10-day moving average of new lows higher.
But it was sentiment that changed drastically. A few days ago the put/call ratio was high at over 100%. Now, keep in mind that the CBOE only has preliminary readings out at the hour of writing this, but the put/call ratio chimed in at 71%. This is important, because if it ends up this reading is in the 60s, it would be the first time it has gotten there since Nov. 4. That date looks familiar, right? Nov. 4 was a peak, not a launching pad.
The market will be back to a short-term overbought reading early next week.
The aluminum stocks moved Thursday. The good news is no one is fussing too much over them, yet. But I was asked about two other aluminum names so let’s look at those charts.
Aluminum Corp of China (ACH) - Get Free Report does not trade very much, which is why I did not highlight it to start with. It’s got some short-term resistance here from the November high, but if I am correct that aluminum can improve from here, then it ought to make it to $9 as the next stop.
Century Aluminum (CENX:Nasdaq) trades a bit more than ACH, but it has moved and I hate to chase. That said, my expectation is resistance at that $8.50 area – the downtrend line and previous high – but it ought to eventually make its way toward $9.50.
The equity put/call ratio’s 10-day moving average is heading up.
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Atlassian (TEAM:Nasdaq) seems to have formed a big top but as of now it has not yet achieved its downside target. It hasn’t even made a lower low than October yet. The measured downside move is near $100-$105, which is between the blue line and the October low.
Wells Fargo (WFC) - Get Free Report has reached its first upside target in the $53-$54 area. That pullback two weeks ago would have been better had it tagged $51. Well better for me, so that it would present a buying opportunity I could live with. If it breaks out from here, I only get a next target around $55-$56, so it’s not that far from here.
Home Depot (HD) - Get Free Report has that unfulfilled downside target near $207, which is awfully close to filling that gap from August. The only other thing it could do to get me interested on the long side would be rally toward $218-$220, and pull back to form a small head-and-shoulders bottom, otherwise, I would think a plunge into that gap could come on news that gets everyone all bearish on it, and create a buying opportunity.