Note: I am taking the remainder of the week off. The next Top Stocks will be published on Monday, Sept. 7.
I’ll say this: At least breadth wasn’t negative Tuesday, as it has been for so many other days. But, again, it wasn’t spectacular; it barely kept up with the indexes. The down-and- outers are still oversold, and they should be given a chance to rally.
Lately they are allowed one or two good days each week, and then it’s over for them. There are a few charts worth paying attention to in the coming days. First the dollar, since it had a reversal Tuesday that no one seemed to notice or care about. I still think it is in a bottoming phase. The chart of Invesco DB U.S. Dollar Index (UUP) - Get Free Report shows the current channel.
Then there is the chart of the Invesco QQQ (QQQ:Nasdaq), which is, using the computerized chart, finally tagging the upper line this week. The Daily Sentiment Index (DSI) for Nasdaq is at 88. It does surprise me that it’s not at 90 yet, but perhaps that's because the statistics have been so poor. I mean look at the ten day moving average of stocks making new lows. That’s a higher high.
Those are the charts I would focus on in the next few days. Do not get complacent, because the Volatility Index hasn’t given up anything this week.
I have a new name in the down-and-outer category, and it’s International Paper (IP) - Get Free Report. I should warn you I have liked it before, and it has disappointed me, but if it can clear these recent highs and that downtrend line it should improve.
Two down-and-outers I have written up positively lately are still OK, because they haven’t moved much. Dow Holdings (DOW) - Get Free Report has a nice dividend, too. It needs to stay over that $42 area.
The McClellan Summation Index is still heading down.
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.
Limelight Networks (LLNW:Nasdaq) has support at this uptrend line. In fact the risk/reward seems good because under that $5.50 area you know you’re wrong. The pattern is not developed enough to believe there will be no trouble on the upside but at least you know where you are wrong, it may just take a few months for it to work.
I am not a fan of the chart of Thor Industries (THO) - Get Free Report, because it has made a lower low, but that having been said, if it is going to make a stand this is where it needs to do so. I would be very concerned if it cannot rally over $100, because then I would look for a potential move down to around $80. I think it is worth trying on the long side but a stop under today’s low is needed.
Datadog (DDOG:Nasdaq) has a lot of resistance overhead but if that move down to $75 hit the measured target off that top it broke down from. What does all that mean? It means that as long as the stock stays over $80, it gets the benefit of the doubt to improve from here.
XP Inc. (XP:Nasdaq) is trying to breakout, so I would give it a chance to do so. It would measure toward $60 if it can do it.
Etsy (ETSY:Nasdaq) seems to have corrected off the August high so as long as it stays over 120 it should start rallying again.