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Transports Aren't Going Anywhere

Things change, but not the market's overbought-ness.

The Market

The most interesting part of today was when the S&P 500 went from up to slightly red and breadth stayed positive. I have discussed this a few times in recent weeks and that is a change from just two months ago.

Another change from two months ago, one I noted here on Thursday evening, is that the FANG stocks for the most part have sat it out. Many of them are still trading near where they were two or three months ago. So that too is a change.

Aside from breadth, the fact that the semis and the banks have been the leaders is bullish, not bearish.

But that doesn't change the overbought-ness. It doesn't change the fact that the transports have not rallied in a week. Quite frankly, I am very disappointed because I thought they would take a few days' rest and rally again, but so far that has not happened. Here's the chart of the transports. I've been eyeing 9400 as the place they should hold, but this uptrend line says it's more like 9450. Either way, that's something to watch.

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I am still of the mind that we should see some sort of overbought pullback, but thus far we've only seen some chopping. However, I would point out that in the last five trading days, the Nasdaq-100 is actually down a smidge, so the overbought reading is working here and there.

New Ideas

Since the FANG stocks have stalled and corrected in the last few weeks, I thought we'd take a look at a few of them and the various support levels. Apple (AAPL:Nasdaq) is sitting right here at $158. A break of $158 is not dire, but it does put support at $154-$155 into play. What is really bearish, though, is if it gaps down under $154 because that leaves an island overhead.

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Facebook (FB:Nasdaq) looks trapped in a range between $165 and $175. At $165, my guess is we see some concern.

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We have looked at Alphabet (GOOGL:Nasdaq) several times in the last month or so with an eye on that $920 area. It has held it, as you can see, dating back to late April. It is still support, but a break of that and I think $890 shows up. Again, filling the gap would be bullish but a gap down under $920 is not. A gap down leaves an island overhead, which is not bullish.

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Finally, a follow-up on a stock I was asked about last week. Nutanix (NTNX:Nasdaq) lifted itself up off the mat today. I'd be inclined to use a stop under $21. The breakout over $24 should give a gap fill.

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Today's Indicator

The 30-day moving average of the advance/decline line will be overbought late this week.

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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.

Brookdale Senior Living (BKD) - Get Free Report is an awful chart and I don't trust it to rally, but if you wanted to take a chance then the stop is so close at under $11. The reason is not that it would fall apart breaking $11, but that would break the third fan line, and typically once the third line is broken, the stock goes into a prolonged downtrend (not that it hasn't already been in one since June!). I would like to see it hold $11 over the next month to feel better about it, because if the market can get past that period of time where folks sell their losers for tax purposes, then maybe this has a chance of getting better.

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U.S. Natural Gas Fund (UNG) - Get Free Report, an ETF to be long natural gas, is on the verge of breaking out. If it can get over the line, then I think it makes a stab at filling the gap and nearing resistance in the $7.20-$7.30 area quickly.

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Devon Energy (DVN) - Get Free Report has a very small base. If it can break out over this $34 area, then I think $37-$38 is doable. It's on my radar to watch for that.

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