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The Covid Shots Poke Holes in the Mega Caps

Let's look at the reaction to the news of three Covid vaccines -- and what's up with the Daily Sentiment Index for the Volatility index?

The Market

It was a terrific breadth day, but the S&P 500 lagged. The last three Mondays we have had vaccine news. Pfizer’s (PFE) - Get Free Report vaccine gave the S&P 41 points. Moderna’s (MRNA:Nasdaq) vaccine news gave the S&P 41 points. AstraZeneca’s (AZN:Nasdaq) vaccine news gave us 20 points.

Some would say we are getting lower highs or diminishing returns on vaccine news. I would say it is likely more a function of each time we get vaccine news, the market sells or doesn’t bother buying the big-cap tech stocks, and they still "own" the indexes. This means we remain in an either/or market.

The real news, at least for me, was that I fully expected the Daily Sentiment Index (DSI) for the Volatility index to fall if we saw the S&P rally. The VIX was down, but failed to really break. Similar to the S&P, it just remains clinging to support. Anyway, the DSI went up, to 13. I am baffled by this.

Yet, the put/call ratio chimed in at .67, which is the lowest such reading since October 12th which was a high in the market.

I had thought if we saw an up day Monday, we would leak the remainder of the week, because I thought if the VIX DSI would be single digits. But with that going up, not down yet the put/call ratio super-low, I will say perhaps we shouldn’t get terribly comfortable. The other news of the day was gold. It broke. And is sitting at the upper level of my target range of $170-$172. I had wanted it down there with the DSI low but the DSI is only $30. I suspect a bit of shuffling around here or a bit lower, and we’ll see that DSI fall. I have my eye on it for signs of capitulation.

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New Ideas

Let’s begin with a follow-up. I was asked about Philip Morris (PM) - Get Free Report a week or so ago and I drew in a pullback from that line as a place I would warm up to the stock. The price is an area but it’s getting into the zone of $74-$76 (sorry, it’s so wide).

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I have a new long-term name for you to look at. The chart of Western Digital (WDC) - Get Free Report has caught my eye for the last few weeks. Near term that resistance at $48-$50 will be tough, but that is looking more like a base every day to me.

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Today’s Indicator

The 30-day moving average of the advance/decline line has been trying to work off its overbought reading by going nowhere, which is a positive.

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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.

Nano Dimension (NNDM:Nasdaq) is the kind of chart that I look at and think I have no idea what it can or will do in the short term, but it broke out of a nice base, so sideways action before another move over $6 seems to be what I’d look for.

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Intuitive Surgical (ISRG:Nasdaq) completed its measured target at $800, when it tagged that area in August and again a few weeks ago. But it is now in a wide trading range ($650-$800). I don’t get the sense it is going to collapse or fly away, but I would say that the stock is down almost 100 points in three weeks, so it is oversold and deserves a bounce especially if it tags that green line.

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For the longest time, I thought Citigroup (C) - Get Free Report was a terrific chart in the bank group. Then came September and it proved me so wrong and shook me out so I gave up on it. It is now back to where I liked it in the first place. I see resistance $55-$58, but overall it has that basing look to it; $55 should be a tough area, though.

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I am inclined to think Social Capital (IPOC) is trying to bottom, but it might take some time. Why? This is a perfect candidate for tax-loss selling if it can’t bounce in the next two weeks. Otherwise, as long as it doesn’t have a new leg lower it looks interesting to me.

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