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The Channel Doesn’t Change

Breadth improves, but the S&P is stuck in a sideways chop.

The Market

Note: Due to some technological problems this evening, tonight’s issue will be somewhat shortened. My sincere apologies.

What we saw today was the sideways chop of the S&P 500 with better breadth. So at least breadth continued better. But the S&P remains trapped in that channel.

The most curious part is that the McClellan Summation Index cannot seem to budge, despite the better breadth. I really thought my math had bad data, but it is not that. The chart is shown below.

But it seems that interest rates are all anyone wants to talk about now. I see so many calls for higher rates. In the near term, though, iShares 20 Plus Year Treasury Bond fund (TLT) - Get Free Report has come back down to the bottom of the channel and looks oversold to me.

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If TLT is going to rally, then we are likely to get some sort of rotation out of what has been working like industrials and financials. Perhaps we see the big-cap techs with some love if bonds can rally some.

The other curious thing is that despite the move in bonds and interest rates, the Utilities Select Sector SPDR Fund (XLU) - Get Free Report has not broken down.

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New Ideas

It looks like we’re finally getting the initial rally in FedEx (FDX) - Get Free Report. I expect it to make a try for $260 on this run.

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Quite some months ago, I was asked about the chart of Air Products (APD) - Get Free Report and at the time I said it seemed to be in a giant trading range. With the exception of that early November fling upward, that has actually been the case. But now the chart is getting interesting. I would love to see it under $275-$280, but I want to buy this pullback.

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Today’s Indicator

The McClellan Summation Index chart is below:

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Q&A/Reader’s Feedback

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.

Fastly (FSLY) - Get Free Report needs to stay above this line. Quite frankly, I am surprised it only got half way into the gap; it should have filled it. But as long as it is over this line, it gets the benefit of the doubt to do it.

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EBay (EBAY:Nasdaq) has some resistance from here all the way up, but I like that it has spent the last six months correcting. The near term is a coin toss to me, but it ought to be able to eat through the resistance with an eventual target in the mid to upper $60s.

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GOGO (GOGO:Nasdaq) has gone sideways for four months, which is a good thing. There is some light resistance from that spike high in early December, but clearing that the next target would be around $15.

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