Skip to main content

The New Highs Are Whispering to Us

Let's see what the number of stocks making new highs is trying to tell us, and, darn, let's look at that chart of Netflix...

The Market

We got the rally, but I’m not sure it was so great. Almost all the indexes are still where they were a few days ago.

Basically the market hasn’t gone anywhere since Friday, but, boy oh boy, prior to the midday swoon did folks get on the bull train.

Just prior to the midday swoon, the put/call ratio had sunk to .67. Had we ended the day there, that would have been the lowest reading in a year. But the swoon took that reading up to .83 at the end of the day. I consider .83 neutral, but it is the low side of neutral.

Once again I am going to address the number of stocks making new highs, because they have yet to surpass the reading from two weeks ago. The New York Stock Exchange had 65 new highs with the peak reading two weeks ago at 98. Nasdaq had 111 with the peak reading two weeks ago at 140.

Image placeholder title
Image placeholder title

I fuss over the number of highs, because it tells me we are not expanding. Think of it this way: If the indexes keep going down and new lows are not expanding, then the selling could be drying up. What do we have now? We have new highs contracting and the indexes are rising. So, is the buying drying up?

The new highs tell us how emphatic the buying is. For now it is tepid. But that can change. The McClellan Summation Index is still rising. Now it needs a net differential of negative 3,400 advancers minus decliners on the NYSE to halt the rise. It has been in this area a lot in the last week or so. When you see a number like negative 3,400, know that means it would require approximately two days of poor breadth like we saw on Monday to change it. The chart is shown below.

I do want to end by noting the Volatility Index was up today and up decently. And despite all the newfound bullishness, it has thus far refused to get under 22 (in August it got to just under 20). Perhaps it’s the war in Europe keeping it here, but I’m going to watch this as we head into an intermediate-term overbought reading in that Thanksgiving time frame.

Image placeholder title

New Ideas

Many months ago I was a fan of Amgen (AMGN) - Get Free Report, but I have not updated the chart in months so I thought I would note that that base measures to $290-$300, which it got to last week. The chart hasn’t done anything wrong, but I would be a profit-taker now. I’d love to see it rally one more time, back into the $290 area.

Image placeholder title

With the market heading toward an overbought condition I am leery of buying new stocks But I keep staring at the base in Capri (CPRI) - Get Free Report, thinking maybe it can break out and then come back and retest the breakout.

Image placeholder title

Today’s Indicator

The McClellan Summation Index is discussed above.

Image placeholder title

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.

Let me just say I am annoyed at myself because I kept staring at Netflix (NFLX) - Get Free Report filling that gap (arrow) last week and knew it was a buy down there and then I just forgot. Now it appears to be on its way to fill that gap up in that $340 area.

Image placeholder title

I was asked about Rivian (RIVN) - Get Free Report and I have to say I have spent the last several days wondering myself if that was a good low last week and maybe this is a base. For now I will just say it ought to make a try for $40. If it can’t get there, that would be a negative but for now I think it gets there. Then I will assess whether or not I think it can break out.

Image placeholder title

Ionis Pharma (IONS) - Get Free Report is one of those stocks that hasn’t gone anywhere since the spring. But it hasn’t broken either. I’d lean toward another rally but it must get up and over $46 soon or it will miss the window.

Image placeholder title
Dow is the Most Vulnerable to Profit Taking

Dow is the Most Vulnerable to Profit Taking

Despite the newfound focus on the Dow Jones Industrial Average last week, it turns out we may be seeing the last gasp of outperformance here.

How Hungry Is This Market?

How Hungry Is This Market?

Here's what I'd like to see happen with this rally -- I'd like it to show some FAANGs. Here's why -- and a look at Microsoft's chart, news highs and more.

Sloppy With a Chance of Rallying

Sloppy With a Chance of Rallying

Here's why I see another rally before the weekend, even amid the messiness, and a bump for Amazon.

Sloppy With a Chance of Rallying

We Can Rally Just a Bit More

Energy stocks have a lot of complacency in them.