Skip to main content

The Market Put on Its MEGA Cap

Yes, you read that correctly: It was all about the mega-cap stocks on Wednesday. And breadth? It was ugly.

The Market

Well, that was quite a day in the market.

It really was all about the mega-cap stocks and that was that. The either/or market continues.

Breadth was so bad that I really thought the data feed was incorrect until I took a look at individual stocks, and, yes, it was as bad as you thought it was. The S&P 500 gained more than 2% and breadth was positive 300. Let’s put that in perspective.

Monday, the S&P was up 40, with net breadth positive 1,480. A nice day. Tuesday, the S&P was up 59, with net breadth positive 1,900, another decent day. Wednesday, the S&P was up 74, with net breadth positive 300. You cannot even put lipstick on that pig. It was really ugly.

And if that wasn’t bad enough, net volume — up minus down volume — was negative. I’d love to find a way to spin it positive, but I cannot. It simply wasn’t.

To add to this messy pile, the Utes were lower — with bonds higher. The transports were red, too, by quite a bit. Banks were horrible, as they retraced the entire week’s gain. And the Russell was flat.

I wish I could tell you the McClellan Summation Index turned up, but that would be a stretch. I’ll say it held its own and flattened out. One harsh down day for breadth, and it will start lower again.

So, come on Helene, don’t you have any good news from today’s market? Well I do. A bit. The Investors Intelligence bulls slipped to 52% from 60%, so that’s good, but by now it is old, since it is tallied through last Friday. So, if we don’t collapse between now and Friday, we can expect it will be back up again next week.

Then there is the put/call ratio, which again was relatively high for an up day, as it chimed in at .98. The 10-day moving average keeps cranking higher, because of that. This is one reason I believe that if we do come back down -- and with Wednesday’s crummy statistics we really should get a backing-off day -- we’ll get to an intermediate-term oversold condition with sour sentiment.

Image placeholder title

There is one more bit of good news: The Invesco QQQ (QQQ:Nasdaq) bounced nicely off that line. If the QQQs get up to the upper line by the time the market gets back to short-term overbought, that would be a reason to look for a decent retreat in the market. Now the QQQs are in the middle of nowhere.

Image placeholder title

New Ideas

Again, I have no strong view on the short-term, except that we ought to see a pullback, after what we’ve seen in the markets this week. But I did want to remind you that the longer-term chart of Universal Display (OLED:Nasdaq) is a chart I still like on a long- term basis. Getting over $210 would be the first step in the process of breaking out. I do think resistance at $220 would be a problem initially, but crossing the line is key.

Image placeholder title

Today’s Indicator

The Volume Indicator is at 52%. Any move to 55% or higher and it will be overbought.

Image placeholder title

Q&A/Reader’s Feedback

Shopify (SHOP) - Get Free Report has the same or similar chart to PayPal (PYPL:Nasdaq) and Amazon (AMZN:Nasdaq) that we have looked at this week. They have potential tops or maybe they are sideways, since they haven’t gone anywhere since July. Either way, support below should provide a bounce, so as long as those supports don’t break. They get the benefit of the doubt. What to watch for on SHOP is an inability to get up and over $1,100. Failure to do so would give it a lower high. A lower high would put a higher probability on a break the next time down.

Image placeholder title

Stoneco (STNE:Nasdaq) has an unfulfilled target in the mid-$60s. There is not much more to say, except it needs to hold that shorter-term line.

Image placeholder title

When we looked at SolarEdge (SEDG:Nasdaq) a week ago, I wasn’t a fan, but it hadn’t done anything wrong yet. Then this week happened. If this stock cannot get up and over $220 in a hurry, then I would say lower prices are in its future. But to be fair, there really is no top to speak of. If there was a rally to fill that gap at $260-ish I’d sell it there.

Image placeholder title

Social Capital (IPOB) - Get Free Report is not a chart I am a fan of, but I could become one if it were to do more work in this area, similar to the way it did in late September, with that back- and-forth-type action. So I suppose as long as it holds over $16-ish, it should improve.

Image placeholder title
What to Watch as We're Overbought

What to Watch as We're Overbought

Let's take stock of the indicators and see what's ahead -- also a look at Cleveland-Cliffs, Southwest and several ETFs.

Rounding Up the Herd

Rounding Up the Herd

We're seeing a turn toward bullishness. Now let's see what happens when the consumer price index lands.

A Win-Win-Win for the Nasdaq

A Win-Win-Win for the Nasdaq

The exchange is working on a winning streak, so let's see if we get a pattern-changing trend. Also, let's check gold, the overbought forecast and Under Armour.

A Win-Win-Win for the Nasdaq

Believe in the Resistance

We learned a few things from Monday's action -- one of them is that resistance still matters. Let's check the market internals, breadth, and ... silver.