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Top Stocks With Helene Meisler

How Quickly Sentiment Can Turn

By Helene Meisler | 12/01/15 - 06:35 PM EST
Stocks in Focus: TLT, JNK, USO, GDX, AWK, BRK.B, WMT

The Market

I thought it was possible for the market to rally some, but instead it showed us why the big-cap stocks keep moving the indexes around as the indexes surged.

This is not to say breadth wasn't good. It was OK, as it has been of late. The number of stocks making new highs was quite disappointing as Nasdaq saw fewer than it had on Monday and the NYSE saw about six more than on Monday. The number to watch now is 130 on the NYSE as that has been the peak reading so far. Today saw 105 new highs.

So breadth has the McClellan Summation Index still heading up. But we are into overbought territory now, so unless folks decide to push the market up on a hope or belief that the ECB will give them another massive round of QE on Thursday, the upside should stall out shortly.

What I found quite interesting today was how quickly sentiment turned. Oh, you can't see it in the options ratios, but anecdotally it was as if all those who were cautious a few weeks ago came out stomping on anyone who wasn't cautious. We practically saw a party as we had the S&P back at 2100 along with lots of chatter about how it was going to be smooth sailing going forward.

What changed between a week ago and today? Nothing.

The most fascinating chart to me is that of iShares 20+ Year Treasury Bond ETF (TLT). When it was at $118, I thought it could rally, but I thought $120 was all it could do, so I was quite wrong on that as it is now kissing $123. You can see a lot of resistance here from the downtrend line as well as some previous highs from October. But despite the move in bonds, everyone seems convinced the Fed will hike in December.

Either someone was short and had to run for cover today or there is real concern in the bond market that the weak ISM numbers today mean something more. The curious thing was that no one seemed terribly concerned over the move.

The good news, though, is that better-acting bonds mean that Barclays High-Yield Bond ETF (JNK) continues to act better.

I still think we're in for a bout of volatility, but thus far I am wrong on that.

New Ideas

I have had a lot of questions about oil and U.S. Oil Fund (USO) since it hasn't rallied and the OPEC meeting is on Friday. Last week, I thought the best it could do was a rally to $14; it barely made it to $13.50 before it headed down again. Thus far, it continues to hold here. The weekly oil inventory numbers will be out tomorrow, so there is a wild card. I would love to see USO break this low, run some, stop and then reverse. That to me would make it look like a decent low had been put in.

I was also asked to follow up on Market Vectors Gold Miners ETF (GDX). We looked at this with a positive eye two weeks ago when it was at $13, and today, with very little fanfare, it peeked itself up over $14. I'd look for $15 to $15.50 as the next target.

Today's Indicator

The McClellan Summation Index is still rising.


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.

I am intrigued by the chart of American Water Works (AWK) because it has hung in there so well. If it breaks $57, it won't be dire, but it won't be nearly as good as if it can hold over that level. A breakout over $59 would give a target near $61 to $62.

Berkshire Hathaway (BRK.B) is a stock trapped in a triangle. We have so many charts that look like this. But as long as it stays over $132, it seems to me it gets the benefit of the doubt. Over $138 and the next target would be in the $142 to $144 area.

This doesn't tend to be a great time of the year to get long retailers, but if Wal-Mart (WMT) can fill that gap and bounce off the line near $58, it should at least be OK in the near term. It will take a long time to build a base that gives us confidence that the stock can offer more than a trade.

Regards, Helene Meisler

Market Is Overbought, Not Overdone
Stocks in Focus: WDAY, CL, NPTN, KRE, NAT

Interesting statistics abound.

11/30/15 - 06:27 PM EST
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