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The Market Gets Its Act Together

We had a proper oversold rally -- even if the mega-caps stayed away.

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.

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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.

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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.

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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.

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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.

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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.

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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.

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.

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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).

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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.

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