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The Clouds Part on the Market

While everyone (aside from the bears) has stopped complaining, let me begin....

The Market

Can you feel it? The gloom from last week is gone. All around us, we see folks no longer scoffing at those darn small caps. I haven’t seen a soul complain about the biotechs in days. Energy? Nope, no complaining this week. In fact, the only complaining I hear is from the bears.

And that has been borne out in the statistics, as the put/call ratio sunk to .69, the lowest since late July when it was .67. So yes, there has ben a marked change in the tone of the market players in the last few days.

Yet can you blame them? Breadth is better. It has actually improved enough to halt the decline in the McClellan Summation Index. It now requires a net differential of negative 600 advancers minus decliners on the New York Stock Exchange to turn it back down. I take this as a positive. The chart is below.

Let me report what I don’t like. I don’t like that complacency has crept back in. I don’t like that the Volatility Index was green today. I don’t like that the Daily Sentiment Index for Nasdaq is still 90 and the S&P is now 86. And I don’t like the S&P gearing up to tag that upper trendline we looked at yesterday.

I don’t like the Invesco QQQ (QQQ:Nasdaq) gearing up to tag its upper line

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I don’t like the Russell 2000 (IWM) - Get Free Report gearing up to tag its minor downtrend line.

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I would love to see a down day or two, so we can shake the tree, back off from the lines, and get better charts. We will not be back to overbought until around Labor Day, though, so I don’t think we are getting a lot of downside. I like the rotation back into the down and out/reopening stocks.

New Ideas

I have been asked about the chart of Intel (INTC:Nasdaq) many times in recent months and each time I have been cautious on it, or at best lukewarm. Yet, I find myself thinking the stock has been drifting for nearly five months now, maybe it can start to improve. So, I have drawn in how it might begin to play out over the next several weeks. You probably need some patience with it, but it’s worth a look.

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I was asked to follow up on Upstart (UPST:Nasdaq), which has been terrific. There is a next measured target around $240.

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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.

I was asked if Baidu (BIDU:Nasdaq) was similar to Alibaba (BABA) - Get Free Report, which we looked at last night. It is a different sort of chart in that its collapse was not as pronounced as BABA's, but the mid-$160s is the interesting spot for BIDU, because as you can see from the arrow on the chart that’s where there is some resistance. The question I have is if it can cross over $160 before it pulls back. If it can cross over $160, then dips can be bought. If it can’t, then this is just another oversold rally. I’d say I’m in the 80/20 camp, meaning I think there is an 80% chance it crosses the line.

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Churchill Downs (CHDN:Nasdaq) has some resistance at $205, but that is a base that has been mapping out for four months now. I’d like to see it mill around under $205 to digest the recent move before breaking out.

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Palantir (PLTR) - Get Free Report had a nice pop from that $22 area and has been digesting it ever since. I was inclined to think this was a bottom when we looked at it at $22, and I still am. I do not want to see it back under $22, though.

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