(Special Note: Due to the long holiday weekend, Top
Stockswill not be published Thursday evening. The regular
schedule will resume Monday morning, April 21. Wishing all
who celebrate a very Happy Easter!)
It was a decent day in the market, although I was surprised
that we could rally so far. The Nasdaq is now up
almost 150 points from the lows of yesterday afternoon.
The best thing I can say about the market is that we are
still oversold. Also, the put/call ratio stayed relatively
high today, showing a reluctance to join the party.
Anecdotally, it seems as though everyone is back on board,
but statistically they are not.
The problems with today's rally centered on the banks and
the semis. Neither group participated in a big way. The
banks have not played along in so long that they could now
be irrelevant. But they do not seem that way. Their absence
eventually catches up to us, it seems. That is probably why
I continue to expect another move lower when this oversold
rally is finished.
The semis, which we looked at in late March as a shaky
group, are finally starting to show their stripes. While
this group did not participate today, it is a bit oversold
still. The eventual downside target on the PHLX
Semiconductor Index (SOX) is near 540.
However, it is the action in bonds that concerns me the
most. The S&P 500 has rallied 50 points in
essentially 24 hours and there has been no letup in bond
yields in that time. Stocks and bonds have been moving in
opposite directions almost the entire year. This is yet
another reason I believe we are seeing only an oversold
rally, not a good low.
I was asked why I think the market will need to retest the
lows, so let me explain. When indicators and statistics make
lower lows, a retest is almost always in the cards. In this
case, the number of stocks making new lows expanded on
Tuesday to levels not seen in almost a year. That will need
to be retested at some point.
The other day, I showed the Nasdaq McClellan Summation Index
and discussed how it had made a lower low. That too will
need to be retested.
For now, we remain oversold and should enjoy more upside in
the coming days. I still expect that to be in fits and
starts, especially now that we have tacked on so many points
in such a short period of time. Support on the S&P is now
back around 1840-1845.
Read Helene's latest column
I like the chart of Talisman Energy (TLM:NYSE). It is
very early in its basing process. I suspect that the stock
will get up to that $11-$11.25 area and then pull back and
improve as it begins to eat through that resistance. Just
keep in mind that the base is small for now and so probably
early in making the move. There is no need to chase.
The 10-day moving average of the put/call ratio just sits
here, trying to decide if it wants to go down or up.
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Curiously enough, Apache (APA:NYSE) continues to look
like a base. There is some decent resistance as it gets into
the $86-$87 area, which it ought to clear eventually. It
might be too soon for the stock to work much higher than
resistance in the next few weeks. By that I mean that if it
cannot break out quickly, it is likely to remain in this
base-building mode for at least another month or so.
I cannot recall the price at which we originally liked
Phillips 66 (PSX:NYSE), but it was before that big
move in the fourth quarter of 2013. The stock has done an
admirable job of consolidating that rise. There is an
unfulfilled target at $86-ish, so as long as it does not
violate that $76 area, hold on and wait for that target.
The contrarian in me wants to believe that the Market
Vectors Russia ETF Trust (RSX:NYSE) is making a
head-and-shoulders bottom. But I am not so sure if you
should bottom fish in it. If it can cross that line around
$23.50, that will improve the chart dramatically. If that
spike down below at $21.50 gives way, then this was just a
consolidation before going lower. My guess is it rallies and
It will not be an easy ride, but it should take us higher, perhaps toward month's end.
If the market goes down tomorrow, I would still look for a lift as we head into the holiday weekend.
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