This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Top Stocks With Helene Meisler

 Top Stocks

We've Got a 2-Way Market

BY Helene Meisler | 01/29/15 - 07:53 PM EST
Stocks in Focus: SOHU, MSFT, VLO

The Market

Is your head spinning around yet from all the ups and downs and going-nowhere trend we've seen? In my view, the biggest change we have seen so far in 2015 versus previous years is that we actually have a two-way market.

By that, I mean even though it seemed as if all we did was go up in 2013 and 2014, in reality we had several market swings. During those swings we rarely had benign breadth readings; mostly we had what I termed the "all or none" market. We were very one-directional -- up and down -- now we have a market that doesn't have massive breadth readings on up or down days every single day. Sure, the indexes are wildly swinging, but the whole market is not swinging with them.

I have given the example in the last few days of Tuesday's 27-point decline in the S&P 500 that was coupled with benign breadth that was only negative by 400 issues. Even Wednesday's similar decline of 27 points only had a net negative reading of 1,500 issues. But much more than the breadth is the relationship of these large-cap indexes and stocks to small-caps. This is a theme I have harped on now for at least a month.

This doesn't mean I think large-cap stocks are awful and can only be played from the short side. It means there are plenty of stocks that don't go up on up days and plenty that don't go down on down days. To show you how different it is, notice that all the big-cap major indexes are below their 50-day moving average lines, in some cases far below. Yet the Russell 2000 is above its. That was not the case in all of 2014.

And then there is the fact that the S&P revisited the midmonth lows (but not December's as I so hoped for) and the Russell did not come down that far. I have shown the chart of the Dow relative to the Russell countless times lately, so I want to do that one more time to show you that despite the last two days where the Russell lagged the big-caps, it looks more like a blip on the chart. I believe as long as that ratio stays under the flat line I have drawn in, this trend should continue.

The best news I have from today's statistics is that the put/call ratio remained quite high all day. Below you will see the chart of the 30-day moving average of the equity put/call ratio. It has turned down. If it stays heading down it would be bullish, but quite frankly when I looked ahead to the numbers it was dropping in the next week or so, I am not convinced the decline in the moving average line can continue unless the market really ramps up from here because of the low ratio readings we're dropping going forward.

For now, I'd say we did not get the setup I so desired, so we'll consider this all part of an oversold rally for now.

New Ideas

I was asked to follow up on WisdomTree India Earnings ETF (EPI), to be long the Indian market. We showed the chart here bullishly a few weeks ago. It has since broken out and has consolidated its gains. The chart measures to 26.50. While it can easily pull back and retest the breakout at 23.50, I would prefer it if held on here since that would indicate strength.

Today's Indicator

The 30-day moving average of the equity put/call ratio is discussed above.


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 Top Stocks is not intended to provide personalized investment advice.

Email Helene here. (SOHU) looks to me to be early in forming a long-term base. As you can see, there is plenty of resistance between $55 and around $60 from last summer, but it is trying to eat its way through that. I would prefer to buy this on dips toward $54-$55, and my expectation is that over the next several months it will back and fill between $50 and $60 to carve out the right side of the chart, completing the base. If that should happen, then when it eventually breaks out -- if it does -- it would measure into the low $80s. This is obviously not on the "short term" trading plan! While a trade under $50 does not spoil the chart, it would make me uncomfortable and I would prefer it does not do that.

Back in December, we looked at Microsoft (MSFT) when we discussed the concept of lower highs, and I used it as an example of how a top forms with lower highs and lower lows. It broke down badly this week, but the measured target was about $41 and it is rebounding from there today. The big hurdle will be for it to get over $42 and stay there. I would think the rally would peter out in that $43 area. If I thought the market had had a good low here, I would have looked for a move up to fill the gap to that $46 area, but right now it looks more like an oversold rally on Day 3, from the measured target.

Valero (VLO) is about the only energy stock in my pile that has had a massive run upward. This is how bases form. The stock has a lot of resistance in this $53-$54 area, but pullbacks into the $49-$50 area now look as though they should hold and continue fleshing out a proper base. Eventually this ought to break out over that line that is currently near $53, which would signal the completion of the base.

Regards, Helene Meisler

Within Reach Again of December Lows
Stocks in Focus: XLU, FXY, TWX, TSLA, AMGN, GOOGL

But will the flood gates stay open long enough for that needed final flush?

01/28/15 - 07:08 PM EST
Special Invitation -- Open House Doors Open Early

You are among a select group of subscribers.

01/28/15 - 11:59 AM EST

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW
Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW

Special Subscription Bundles

Want more than one service? Sign up to one of our packaged services and take
advantage of amazing savings!

Portfolio Plus Real Money Pro
Chairman's Club
Action Alerts PLUS checkmark | Portfolio Plus checkmark | Real Money Pro Portfolio checkmark | Chairman's Club
Stocks Under $10 checkmark | Portfolio Plus checkmark | Real Money Pro Portfolio checkmark | Chairman's Club
Growth Seeker checkmark | Portfolio Plus checkmark | Real Money Pro Portfolio checkmark | Chairman's Club
Dividend Stock
checkmark | Portfolio Plus checkmark | Real Money Pro Portfolio checkmark | Chairman's Club
Quant Ratings
checkmark | Portfolio Plus checkmark | Real Money Pro Portfolio checkmark | Chairman's Club
Real Money checkmark | Real Money Pro Portfolio checkmark | Chairman's Club
Real Money Pro checkmark | Real Money Pro Portfolio checkmark | Chairman's Club
Trifecta Stocks checkmark | Chairman's Club
Action Alerts
checkmark | Chairman's Club
Options Profits checkmark | Chairman's Club
Daily Swing Trade checkmark | Chairman's Club
Top Stocks checkmark | Chairman's Club
Quarterly Call
with Jim Cramer
and Stephanie Link
checkmark | Chairman's Club
Started Now Started Now Started Now


DOW 17,164.95 -251.90 -1.45%
S&P 500 1,994.99 -26.26 -1.30%
NASDAQ 4,635.24 -48.1670 -1.03%

Brokerage Partners

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters