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Where're the Bulls?

The put/call ratio ended the day just over 100%, here's what the means.

The Market

It feels, anecdotally at least, that folks have gotten more bullish after the last few days in the market, but we still can’t tell with the put/call ratio since that ended the day just over 100%.

This surprises me.

Not that folks aren’t all-in bullish, but that they are not even a little bit bullish. Typically by now we should see readings in the 80s on a regular basis. Yet there have been exactly two such readings since February. The Investor’s Intelligence bulls, however, did notch a bit higher. They are now at 46.6%, which to me seem to reflect the proper sentiment I see around me. I would summarize sentiment as somewhat more bullish than it was, but not giddy. And I somehow doubt we’ll see the American Association Day Traders terribly excited on Wednesday. After all, Nasdaq was down over a hundred points on Tuesday.

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Away from that there is very little change in the indicators. We continue to edge toward an overbought condition in the market. It seems we’ll be overbought midweek next week. It also seems we’ll have an intermediate-term overbought reading around then, as well. Much will depend on what the market does in the next few days, but that’s what it looks like now.

Down below you will see the Volume Indicator. Recall it got oversold in March, when it fell to 38%. Readings over 55% are overbought. It is currently at 54%. It is possible that it will get over 55% by next week.

A few things to keep in mind. The date must not be written in stone. By that I mean it appears the day is Wednesday, but we might stall out a few days before or after. It’s just that now we can see the time frame.

The other thing to note is that it appears that the McClellan Summation Index will not be set up to roll over by then so that would make the overbought reading a loss of upside momentum and not a big negative for the market.

The one indicator that is concerning to me is that the number of stocks making new highs is simply not expanding. I realize we fell hard, but Nasdaq had 41 new highs where it had 67 a few days ago.

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Another factor is to see if sentiment shifts, as we head into the overbought reading. I will report if there are changes. We’ll also watch to see if breadth loses its luster. For now, my guess is when we do get overbought, we’ll get a decent loss of momentum and some sort of pullback.

New Ideas

I am running out of charts that haven’t moved already and that usually means we’re heading into an overbought condition. With that having been said, Adobe (ADBE:Nasdaq) hasn’t gone anywhere in two weeks, so if it can breakout over $350 perhaps it can get up there and fill the gap near $370.

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Today’s Indicator

The Volume Indicator is below:

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Q&A/Reader’s Feedback

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 struggle with charts like Medtronic (MDT) - Get Free Report. It is already at resistance and it has already completed the 90/100 rule (90% of the stocks that get to $90 will get to $100). There may be one more rally left in it, but to me there are better places to look, this one just has too much resistance overhead for my taste.

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Nordic American Tanker (NAT) - Get Free Report had a nice breakout two weeks ago, more than met the objective and is now coming back to earth. It fills a gap just under $6, so maybe it enjoys another rally after that, but I’d much rather wait and see if it can come back to that $5 area now. Spike highs on news like this tend to be the type of chart that is far too speculative to get involved.

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I don’t love the chart of Bilibili (BILI:Nasdaq) but I do think it should rally from this $26-$27 area since there is an unfulfilled target in the mid $30s. Why isn’t it my kind of chart? Because I am a fan of low bases not high ones. A trade under $25-$26 and I’d get nervous.

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