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Top Stocks With Helene Meisler

 Top Stocks

Not Seeing Much Panic

BY Helene Meisler | 09/22/14 - 06:55 PM EDT
Stocks in Focus: CVX, PM, QIHU, CVRR, TSLA

The Market

I would love to report to you that I have a ton of positive divergences after today’s decline, but I don’t. In fact, the number of stocks making new lows increased ever more.

The market isn’t even at a good oversold condition. I can envision a down open tomorrow and a reversal for a one- or two-day rally and then down again but that’s the best I can see right now. We need some extremes and we just don’t have them.

The thought behind a one- or two-day rally after a down opening comes from the put/call ratio pushing over 100% for the first time since Sept. 11. And the fact that the Russell 2000 is now not terribly far from the uptrend line I drew in weeks ago (around 1120).

Then there is the ISE equity call/put ratio. It fell below 100%, which is not very typical. This is only the third time this year we have seen this. In 2013, it happened six times. That makes eight times in the last two years. Five times, we had a one-day rally and then fell hard back down. Twice, it just kept on falling for another day or so. Only once did it just simply chop. That is another reason why I can see a one-day rally and then back down again.

But mostly it’s because I did not see much panic today. The Market Volatility Index (VIX) was elevated but not jumpy. The TRIN was not far over 1.0. The down volume on the NYSE was “only” 84%.

As far as oversold conditions go, the oscillator I use looks oversold but there is plenty of room for it to keep on falling. The Nasdaq Momentum Indicator shows no signs of turning up. And the McClellan Summation Index, where I calculate what it will take to turn it from the current down to up, needs a net differential of plus 3,200 advancers minus decliners on the NYSE. Over 4,000 and it is oversold, so you can see it is not “there” yet.

Finally, continue to keep your eyes on iShares iBoxx $ High Yield Corporate Bond (HYG), an ETF to be long high-yield bonds. I have been talking about this pattern looking similar to the one in July and you can see so far it is desperately trying to play out.

New Ideas

Keep your eyes on Chevron (CVX) (no chart shown) because it did not make a lower low today. If CVX can hold, it could be a turn in the oils. In the meantime, Halliburton (HAL) finally fell apart (how long ago did I highlight the negative chart? It has to be months!) The measured target is near $62.

If you are looking for a head-and-shoulders bottom, then Philip Morris (PM) is trying to carve one out. I think it will get stuck at that gap just above $88, but longer term it would measure to the old high near $91.

Today’s Indicator

The 30-day moving average of the advance/decline line remains overbought.

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.

Qihoo 360 Technology (QIHU) has had one heckuva fall from $105. It closed today at $74.94 -- that’s almost a 30% decline. So the next time some idiot on television acts as though the market is just fine because the S&P 500 is sitting at 2000, please show them this chart!

In any event, there is support at the $75 area. And it will probably have some sort of bounce from this level. But be aware that in this market these types of charts have had terrible bounces or sideways moves only to fall again. If this breaks $75, it will crack a yearlong low that has been in place so the measured target will be significantly lower, perhaps down to the $20s longer term.

I look at CVR Refining (CVRR) and see support in the $22 area. I also see a ton of resistance in the $23.50 area. So while it has bounced off $22, if it cannot get up and over $23.50 soon, then it will simply use up whatever “oversoldness” it has by going sideways before it breaks down. So those are your parameters: Either over $23.50 or it ought to break $22.

Tesla (TSLA) has a head-and-shoulders top that it is trying to complete. While it may bounce in a few days, especially due to the end of the quarter next week, I suspect it will eventually come down and tag that lower line below $240. My inclination is to wait for it to tag that line.

Regards, Helene Meisler

The Negatives Remain
Stocks in Focus: DDD, VMW, AWAY, EEM, CEF, GLOG

And we all know that, in the market, 'hope' is a four-letter word.

09/22/14 - 09:05 AM EDT
Watch the S&P 500 Level
Stocks in Focus: GOOG, GOOGL, FCX, AEGR, AMZN

The key is to see if it can push through the resistance line that has held up for nearly three months now.

09/18/14 - 07:33 PM EDT

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