You probably don’t need me to tell you how sloppy today was, but I’ll share some statistics with you.
First, let me note that New York Stock Exchange breadth was dead flat. That is highly unusual, since the Russell was so weak. It is also odd because upside volume was only 40% of the total. That basically means stocks were up, but most of the volume was in the ones that were down. But doesn’t this just confirm my point on low/high volume? Volume tends to rise as stocks fall and tends to fall as stocks rise.
Over on Nasdaq, it was a different story. Breadth was terrible and the volume situation was even worse. Seventy-two percent of the volume was on the downside. Recall, I complained much of last week that so little of the volume was on the upside, despite the rally. Well, now we saw some of the selling intensify.
We see that in the number of stocks making new lows, as well. There were 73 new lows on Nasdaq today, which is the most it has seen since March 30. You can see the uptick on the chart.
The bottom line is that I don’t view the market much differently than I did a few days ago. I think we’re more apt to see continued chop for a few days, and then I think we pullback in the latter part of the month. What can change that view? A massive improvement in breadth and a souring of sentiment. If that happens, I’d be happy to change my view.
I want to revisit the chart of Workday (WDAY:Nasdaq), a stock I have liked for some time. If it can get through this resistance just overhead, it would be a big plus.
The 30-day moving average of the advance/decline line will be overbought near the end of this week.
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United Parcel Service (UPS) - Get Free Report had a nice breakout this week and that should now measure to the $195 area. The only caveat would be if it reversed course and headed south back under $170, because then it would look like a fake-out not a break-out.
If DraftKings (DKNG:Nasdaq) breaks this area, there are layers of support all the way down, so it’s not as dire as it could be, but it does set up a top that would then measure to the high $40 area over time. A stock that is weak when the market is at the highs is to be avoided in my view. I’d rather bottom fish weak stocks when the market is oversold, not when it is overbought.
Chewy (CHWY) - Get Free Report met its downside target when it dropped in March and is now trying to hold and build a small base. I’d say as long as it can hold over that line (around $80) it’s worth a shot. It just might take some time since that spike high over $90 is going to be a problem the first time up.