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Trading Will Only Get Slower From Here

Market breadth isn't bad; will oil rally?

The Market

We are clearly well into a week of slow holiday trading, as today was the lightest volume we've seen for Nasdaq since the middle of October. It will likely dry up even more as the week progresses.

Very little changed in the market today. The breadth was actually terrific midday when the S&P was up a mere two points. At that point, we saw the net breadth on the NYSE at +700 (advancers minus decliners). Then the market sold off and breadth gave up the gains but never really went negative. However, at the end of the day, that action stopped.

Once the market closed, we had the S&P down a mere two points and breadth barely positive. The good news is that breadth wasn't worse. But in reality, it was as if, once they powered the indexes back, it was just the big-caps that helped it, not individual stocks. In other words, it was more of the same.

The most curious part of all of this is we are one week into this oversold rally and the McClellan Summation Index still needs one good breadth day to turn back upward. Typically, when it takes that long for the Summation Index to turn upward, we think it has missed the window of opportunity to do so.

Everyone seems focused on oil and the potential for a rally, so I thought we might once again check in on the chart of U.S. Oil Fund (USO). If USO can rally -- and I'm not so sure it can -- then it ought to get stopped at that resistance at $14.

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What I would love to see instead of it holding and looking like it is just sitting there is a good whack lower that reverses course to the upside. That would make me think we've flushed out the weak holders enough to rally.

We're still not yet maximum overbought, but we seem to be stalled out now.

New Ideas

Let's keep in mind we have not taken Barclays High-Yield Bond ETF (JNK) off our screens yet. It did have its quietest day in a week, so it must be getting a bit oversold. But can it bounce?

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Considering I've been a fan of the chart of Pepsi (PEP), I was asked about Coke (KO). I think Coke is fine but the target is only measured near about $46, although if it can get over that late-October spike high, I might be able to calculate a target closer to the $48 area. So for now let's say as long as it stays over $41.50 on a longer-term basis, I think the stock has a chance at the mid to upper $40s.

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Today's Indicator

The 30-day moving average of the advance/decline line has come down quite a lot, but is not yet oversold.

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Q&A

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.

It’s difficult for me to remember exactly how long I have been bearish on Under Armour (UA), but suffice to say it’s been a while. I had a downside target in the $81 to $82 area, so it’s possible last week’s plunge was enough for now, but it’s hard for me to get bullish on the chart. I look at it and see resistance in that $95 to $97 area that doesn’t seem like it will be easy to overcome. A retest of the mid-$80s or even a push down to fill last week’s gap just below $90 might get me more interested on the long side for a trade, but otherwise, there is too much resistance overhead for me to get excited about the upside.

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On a longer-term basis, the chart of Crown Castle (CCI) is interesting because it did break out to a higher high in early November. The oddity is that the base is so long but the measurement is only to about $95. In the near term, the high at $88 is going to be tough to overcome, so I’d prefer to wait and buy dips or simply hold. It doesn’t feel like it’s going to run away in the near term, but longer term it is appealing.

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Discovery Financial (DFS) might be working on a base, but it feels awfully early to me. All that resistance between here and $60 is going to be difficult to overcome without some more work below that line. In other words, this looks like yet another lower high, so until it can take out $59, I’ll stay away.

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