Skip to main content

When Will the Indexes Care?

Trying to find the answer to this often-asked question.

The Market

Lately it seems they keep trying to crack the senior indexes to the downside, but they keep getting saved by the end of the day. Individual stocks, though, are not so lucky.

Today's breadth was negative for the third straight day, the longest streak since mid-August. Net volume has been red for six of the last eight trading days and the last four days in a row. Yet the S&P 500 sits where it was, or not far from it, last week.

Then there is the number of stocks making new lows. While we haven't seen an increase over the peak readings of the last few weeks, today's action saw the NYSE new lows jump up to 104. Friday there were 60. On Oct. 25, there were 111. So for now, 111 is our peak reading.

The question that keeps popping up in my inbox: When will this end? When will the indexes care? I wish I had the answer for you but I don't. I can tell you that if we can see them sell the market off in the next few days, it will get us to an oversold condition, probably enough to rally again.

I know an oversold condition sounds ridiculous. But look at the Russell 2000 ETF (IWM) - Get Free Report. It has been dripping for six straight weeks. If it comes down to the blue line, I think it would be grossly oversold. If it rallies to $148 then it is a test of how well it can rally: Can it get over $148? For now I think it can't.

Image placeholder title

The ratio of IWM to the Nasdaq 100 ETF (QQQ:Nasdaq) hasn't done anything for days. It needs to lift.

Image placeholder title

So I maintain we would be better off if we could see the market down first.

New Ideas

How do we get oversold? Look at the chart of the iShares Transportation Average ETF (IYT) - Get Free Report. It's bounced right off support. It should be able to rally to $174-$176. The operative word is "should."

Image placeholder title

Speaking of transports, United Continental (UAL) - Get Free Report cannot get off the mat. It is starting to look as though it needs a flush, a break that clears out the sellers and then reverses. Quite frankly, in this market stocks like this have tended to leak rather than flush.

Image placeholder title

Then there is Altria (MO) - Get Free Report, which as you know I have liked for several weeks. I am going to be sorely disappointed if it can't get over $66. If it can, $69 is the next resistance.

Image placeholder title

One final word. Several of you have asked about Allergan (AGN) - Get Free Report on a regular basis. Today's reversal off $170 could be the beginning of a bottom. It is still too early to tell, but at least you know the stop: Under $170 and you're wrong. I like it, at least for a trade.

Image placeholder title

Today's Indicator

The 30-day moving average of the advance/decline line looks like it's oversold, but the math behind it says "not so much."

Image placeholder title

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.

I was dead wrong on the utilities as they have continued upward. Con Ed (ED) - Get Free Report has been part of this amazing rise. A measured target would be around $90. If it gets over that, then I suppose the 90/100 rule applies (90% of the stocks that make it to $90 will make it to $100). Here's my question, though: If ED rallies another 10%- plus, what will the yield be? It is currently around 3.1%. That would be quite incredible. In any event, support is now $85.

Image placeholder title

GlaxoSmithKline (GSK) - Get Free Report completed a head-and-shoulders top and still has an unfulfilled target around $33. I would wait for a pattern to develop. For that to happen, it needs to rally and come back down to retest. It hasn't even rallied yet. The best news is at least it's close to the target.

Image placeholder title

I thought Electronic Arts (EA) - Get Free Report was at a top a few weeks ago. Then it rallied to prove me wrong. Now it's come back down, to prove me wrong again. It still looks like a top. Support is at the intersection of those lines, around $107.

Image placeholder title
How Hungry Is This Market?

How Hungry Is This Market?

Here's what I'd like to see happen with this rally -- I'd like it to show some FAANGs. Here's why -- and a look at Microsoft's chart, news highs and more.

Sloppy With a Chance of Rallying

Sloppy With a Chance of Rallying

Here's why I see another rally before the weekend, even amid the messiness, and a bump for Amazon.

Sloppy With a Chance of Rallying

We Can Rally Just a Bit More

Energy stocks have a lot of complacency in them.

Double Dipping This Holiday?

Double Dipping This Holiday?

Dip buyers -- will you see them this season? Also, let's check the indicators, the intermediate-term overbought reading to come, expected volatility and ... the chart of GOOGL.