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The Picky Market

Let's look at the either/or action, the transports and bands, sentiments, and volatility.

The Market

It was a minimal day for the either/or market. By that I mean the market was discerning, even among the big-cap tech stocks. For example, the SOX is down 4% in the last six trading days, so this time the semis haven’t played along.

Yet, the Transports and the banks were all green. They were barely green, but there was a time a few weeks ago that if the mega-cap tech stocks were up, these groups would have been solidly red. I still think the reopening names are the most interesting ones right now.

The banks are a little overbought, and the transports as well, but that’s the worst I can say about them. I do think we will eventually get to the point that folks are recommending transportation stocks; I look forward to that day.

On the sentiment side of things, I have noted that I think AAII sentiment is more closely associated with the reopen stocks while the National Association of Active Investment Managers reading is closer to the big-cap tech names. Neither reading changed much this week, but please look at the four-week moving average of the American Association of Individual Investor bears. It has gone from 22 %to 28%. I think that’s the bearishness in the reopen stocks, which I think favors them right now.

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The NAAIM Exposure Index did not change and remains at 97.

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So the big change is that the daily sentiment for the Volatility Index finally went to single digits and closed at 8 today. I would be shocked if we don’t get a bout of volatility in the next few trading days. Not to mention that trend line for the S&P is now a few points from being tagged once again. I do think we will like those reopening stocks into dips.

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New Ideas

I was asked about the chart of Penn National Gaming (PENN:Nasdaq) and I thought it was interesting enough to put here. The reason is that there is resistance at $75 — plenty of it — and there is resistance all the way up. However, that reversal from just over a week ago makes the stock intriguing since it has formed a small flag off of it. So a move through $75 isn’t an all-clear, but it is a signal that something has finally changed in the chart that would make me favorably disposed to it.

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Our old friend Gilead (GILD:Nasdaq) is trying desperately to hold on to the breakout. There is all that resistance from early 2020 to deal with but now as long as it stays over around $68 it working in our favor.

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Today’s Indicator

The 10-day moving average of the put/call ratio has really refused to come down on this last move up and today it turned back up. I honestly don’t know what to make of it except that if it starts moving over .95, I’d consider that bearish not bullish. The reason is that when an indicator does something it is not supposed to do, I always think it is telling us something.

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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.

I have tried to bottom fish in MSOS (MSOS) an exchange-traded fund for the cannabis stocks a few times and it has netted me nothing but losses. Until this chart can show at least a higher low coupled with a higher high, I just find it hard to bottom fish in it. Keep in mind that as we head into the fall we are heading into tax-loss selling season, so if this can’t get going soon, it may have a lid on it every time it lifts up.

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We have looked at Rolls Royce (RYCEY) a few times and I thought it was trying to build a base and then it fell through $1.40. It has since recovered so perhaps that was just a quick shake out. It needs to make a higher high though, something it hasn’t done since March. It is the type of chart I can warm up to though, especially if it stays over $1.40.

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Hyrecar (HYRE:Nasdaq) had a poor earnings report but it has some support in the $8 area so I’d look for a bounce from there. But that’s the best I can say about it now. If it can hold and prove it wants to hold $8 for a while then maybe it can improve. But for now, a bounce is the best I see.

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