The Market Gets Its Act Together

The Market

Finally, we got a proper oversold rally. I know, the mega-cap tech stocks didn’t participate, so you’re wondering how good the rally was. It was good enough. Quite frankly, it was better than last week. You might recall Thursday the S&P 500 rallied 39 and net breadth last week was positive 990; Monday the S&P rallied 40 -- so quite similar -- but breadth was positive 1,480. That’s better in my view. If you are concerned that the mega-cap tech stocks didn’t participate, then I would simply remind you that we continue in an either/or market, where either the down-and-outers rally or mega-caps rally, but not both. Can we see both rally post election? I would think the mega-cap names would be so oversold in the next few days to have some sort of rally. Notice that despite the underperformance on Monday the Invesco QQQs (QQQ:Nasdaq) are still holding their support area.

I want to make a few more points. The Hi-Lo Indicator for Nasdaq is now at 43%. Even if Nasdaq rallies hard Tuesday, it is possible this indicator could continue lower. A move under 20% makes this very oversold on an intermediate-term basis and if it is intermediate-term oversold, the rallies will tend to be longer in time.

Finally the gap overhead in the S&P is quite obvious and really ought to get filled in the next week or so. I honestly have no idea if the market can come back down again this week, but if it can, I think the intermediate-term indicators would get oversold and sentiment surely would be quite bearish.

New Ideas

I was asked to follow up on Under Armour (UAA) - Get Free Report a chart I liked months ago. It hasn’t moved up with a lot of pizzazz, but it has ground higher. I have a measured target around $15-$16. There is a tiny little gap to fill at $16. My inclination would be to take some off the table in that $15-$16 area and use a trailing stop on the remainder. I would use a stop under $12-$13.

For the longest time, whenever I was asked about Nutrien (NTR) - Get Free Report, I would note that my go-to-name in the group is Mosaic (MOS) - Get Free Report, but I see NTR had no selling in October and is now pushing up against a flat resistance line. A move through that $42 area would be impressive and bullish.

Today’s Indicator

The 30-day moving average of the advance/decline line just isn’t as oversold as it ought to be. I wish I could report it was oversold, but it is not under the zero-line and in another few days, it could very well be headed right back down.

Q&A/Reader’s Feedback

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Salesforce.com (CRM) - Get Free Report is hanging by a thread on the uptrend line. The last time we looked at it back in September I said I would prefer to wait for the gap fill to buy it and I will stick with that view. Should CRM fill that gap down near $220 I am of the mind that it would be oversold enough to have a very decent bounce. If you prefer to buy here to play the uptrend line then at least you know where you are wrong and where it would likely go.

I stare at the chart of Micron (MU) - Get Free Report and think if it can hold here which would be a higher low than a month ago then I would look for it to get over that $55 level within a few weeks/months. If it cannot hold on then I think it is likely to take a trip to the blue line where I do think it would hold. I mean the stock has been sideways since April yet unlike so many others it is not threatening the prior low (in August in this case).

Activision Blizzard (ATVI:Nasdaq) hasn’t done anything in months (like so many other charts). It needs to make a stand and hold here though. If it breaks then I think $70-ish comes into play. I don’t love the chart, but it is oversold.