Note: Top Stocks will not appear Wednesday or Thursday, but will be out before Monday morning. Wishing all Americans a very Happy Thanksgiving!
It was another odd day in the market, only this time what went up Monday gave it up Tuesday. And all those defensive names surged. Perhaps it was because there was a big rebalancing for some of the Morgan Stanley Indexes, so perhaps that skewed the breadth. I hate to rationalize an indicator, so I shouldn’t, but breadth was positive 200 on the New York Stock Exchange, while Nasdaq was flat. For a day where the S&P gained nearly seven points, if this continues, it means we had a two-day reprieve – Friday and Monday – from days where breadth does better or keeps pace with the indexes. We’re also back to where we were last week: poor breadth relative to the indexes.
I do the math each day to see what it will take to turn that McClellan Summation Index around. And it did not budge Tuesday. It still needs another up day to see any kind of turn up in the indicator, which is shown below.
The number of new lows remained steady. In other words, the contracting stopped. The 10- day moving averages continued downward, which is good news. But if the new lows pick up again, so will the moving average.
The Investor’s Intelligence bulls notched up to 58% this week. If the market can stay strong for the remainder of the week, it’s easy to see the bulls over 60% next week. After all, the Russell finally broke out, so everyone is quite excited now.
There was very little change in the DSI today. Nasdaq crept up to 87. The S&P 500 crept up to 85 and the Volatility Index remained at 10.
If the move in SPDR Gold Shares (GLD) - Get Free Report, an exchange-traded fund for gold, was not goosed up as part of the rebalancing, and therefore doesn’t reverse itself Wednesday, I’m inclined to think this could be a double bottom. At the very least for a rally. I mean, remember the love for gold at the highs in August when the DSI was over 90? Then remember how often I was asked about it as it backed off? Now? Not a word. That means I’m a bit more interested.
Yes I really wanted it to move down to $134 and the DSI to go under 20, so perhaps I should wait, but when I see this sort of action I get very interested.
The chart for the McClellan Summation Index is below:
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.
TherapeuticsMD (TXMD:Nasdaq) does not look good. In a world where biotech is hot, hot, hot this stock is as cold as ice. I suppose if it can hold this $2.50 area, it might become a tax-loss rally candidate, but that’s the best I can say about it. There has literally been no bounce to speak of since that gap down in October.
I have good news for bottom fishers in Pinterest (PINS) - Get Free Report. That top it broke down from measures into this $18-$19 area. In addition, last week’s move down semi-retested the early November plunge. There is no base to speak of, but this could be a tax-loss rally candidate, too. If you like bottom fishing in that sort of stock, this one is speculative, but you know where you’re wrong.
Wells Fargo (WFC) - Get Free Report has had a terrific run. That base has a measured target in this $53-$54 area. There is a longer term target around $58, but I suspect there is going to be a generous sideways consolidation or correction before it makes another push up toward that target. If it pulls back toward $51, I’d look to dip a toe back in.