At least we had some action in the market today. But there are a few themes that have been consistent in the last few weeks and they continued today.
First, a lot of stocks got to resistance and sold off. A lot of stocks got to support and rallied. That leaves so many stocks trapped in giant trading ranges. Second, there are a ton of gaps in this earnings season. Big gaps. Up and down. That is unusual. The reaction to earnings has been pronounced in some places and so muted in others. Apple (AAPL:Nasdaq) is the perfect example: great earnings, couldn’t rally but couldn’t really go down either. Chop.
Third, the either/or market remains undefeated. Big cap stocks moved today, taking the big-cap indexes with them. But small caps sat it out and breadth was crummy. What’s more, Nasdaq was up today, yet not only did it have the highest volume of the month, 63% of that volume was on the downside.
Fourth, the indexes are not moving as much as individual stocks are.
And, lastly, the complaints are piling up. No one is making money, because they make it here and lose it there. And that is not a great market to be trading in.
The McClellan Summation Index is still rising. It will take a net differential of negative 500 advancers minus decliners on the New York Stock Exchange to halt the rise, so the cushion is small.
In terms of sentiment, the good news is the American Association of Individual Investors bulls backed off the same way the Investors Intelligence bulls backed off. But the National Association of Active Investment Management (NAAIM) folks have upped their exposure back over 100 for the first time since February.
I am not quite sure I could possibly pick a side the market wants to be on. Right now the major indexes are up on the week, but it sure doesn’t feel that way. Next week brings us the beginning of a new month, which often sees a rally from new money coming in. Let’s see if that continues. Keep in mind, taxes are due mid-May this year, instead of mid-April.
First, let’s look at Kimberly Clark (KMB) - Get Free Report, a stock I have liked. It had a great run off the March lows right to resistance, then earnings were terrible and it gave it all back. But here we are again with the stock at support, and, out of nowhere, it rallies right off support. So, it’s basically six months of nothing.
Many of the drug stocks have done the same, falling from resistance. I suspect they too will get to support and rally again.
I was asked about Boeing (BA) - Get Free Report, which is holding this $230 area for now. I would love to see this stock come down to the $220-$225 area, because if it breaks $230, I think we get a mini panic and it falls right to support but most will see that it broke $230. So I am a buyer $220-$225.
The 21-day moving average for the put/call ratio of exchange-traded funds is getting quite close to where it was just prior to the September high.
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I struggle with charts like Qualcomm (QCOM:Nasdaq), because it has been making higher lows (bullish) and on earnings it made a higher high (bullish, too) but overall, it is mired in nothingness. I can just as easily picture it riding that upper line as I can seeing it come down and test the lower line. It’s one of the reasons I have shied away from so many of the semiconductor stocks. They came down, didn’t break but keep bumping up against resistance on rallies. Trapped is what I would call it.
Astro-Med (ALOT:Nasdaq) should find some support around $15, but there was a measured target at around $18, so I would need to see a pattern set up again, before I can see anything more than that. Clearly if it breaks $15, while there is further support below it spoils the short-term chart. It would be best if it can go sideways from here for a few weeks and work its way toward that uptrend line.
The question is where would you buy back Shopify (SHOP) - Get Free Report and here we have a similar situation to Qualcomm, where support held, but resistance held, too. On a trading basis I would say that gap fill near $1,150 would be the place to nibble and leave some room in case it comes down to test the line. The line and the gap should intersect in about three or four weeks. If that happens, it probably makes buying the gap fill a better risk/reward.