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V Day: Volatility Day, That Is

Amid this wild action, let's cast a vote for the indicators, and see their possible early warning signs.

The Market

Well, if you wanted intraday volatility, we got it!

I still think we should get some more volatility this week. At some point I will change my view and turn more cautious on the market, but as you know, first I need the indicators to roll over and so far we have not seen that.

Are the early warning signs there? Maybe.

The number of stocks making new highs today on the New York Stock Exchange were fewer than yesterday and still about 20 fewer than Nov. 1. So we’ll watch that, since the S&P 500 didn’t get over last week’s high yet. Maybe it improves if it does get up and over 3900.

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Nasdaq also has fewer new highs, but it hasn’t come that close to last week’s high. I would note that the Hi-Lo Indicator stopped going up today. I am still inclined to think there can be another rallying attempt into Thanksgiving, but I will monitor this closely.

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Let me report that the breadth continues to chug along and that means the McClellan Summation Index is still pushing upward. It would require a net differential of negative 3,600 advancers minus decliners on the NYSE to halt the rise. The chart is shown below. Elsewhere the transports are the index to watch tomorrow. You see they have been up for four-straight days (they have also been outperforming). They have not seen five consecutive green days since October 2021 so if that changes and the transports are up at the end of the day on Wednesday, that’s a pattern change.

Finally, the put/call ratio, which I noted last night was at .88 dropped to .84 this morning. Yet as soon as the market plunged midday that indicator shot up to 1.16 at the end of the day. So, maybe folks got complacent but they quickly turned, like last week.

New Ideas

I am warming up to the utilities again. They have been correcting since the calendar turned to November, but I think they should rally again.

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Today’s Indicator

The McClellan Summation Index is discussed in full above.

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Q&A/Reader’s Feedback

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Peabody Energy (BTU) - Get Free Report is a good chart. It’s a little overbought up here, but if it can digest the recent gains and stay over around $28, it should ultimately make its way to the mid-$30 area.

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Constellation Energy (CEG) is still hanging in there for now. Unless it makes a lower-high and/or a lower-low it is easy to simply not like it, but it is not easy to be bearish on it. I suspect if it gets to $80 there will be a bounce. Should that bounce fail at a lower high then we might be looking at a head and shoulders top.

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Levi Strauss (LEVI) - Get Free Report has a bit of good news in that there was a measured target around $13, so now maybe it starts the process of holding and basing, but other than that the resistance that starts at $16-$17 looks like a good place to sell it for now.

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Coinbase (COIN) - Get Free Report is hanging by a thread. Should it break I would expect it to hold at $40. In fact I’d probably buy it down there for a quick rally but that’s all I see in the chart. I’d sell if it can get back to the 60 area.

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