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Top Stocks With Helene Meisler

Who Turned Down the Volume?

By Helene Meisler | 10/08/15 - 06:33 PM EDT
Stocks in Focus: CRM, LAYN, CSCO, GILD

The Market

There was a minor change in the market today. Let me reiterate that it was minor, but I do want to point it out.

First, we've discussed the stretched "what if" for the McClellan Summation Index, which of course got more stretched today. But keep in mind, each day we go on we get closer to an overbought reading on my own Oscillator. Recall that the Oscillator I use is based on the advance/decline line, but it is also based on a time factor. So we look for when we stop dropping red numbers off the 10-day moving average of the advance/decline line. That comes midweek next week.

The minor change today showed up in volume. For the last week, volume has exploded upward, which quite frankly has been a rare occurrence in this bull market -- up volume on up moves. But today the volume tailed off quite abruptly. For Nasdaq, it was the lowest volume since Sept. 23. For the NYSE, it was the lightest volume since Sept. 25.

I don't typically spend that much time fussing over volume, but on the individual stock charts it was quite noticeable. We know all rallies begin with short covering, but for them to continue we must see real buying come in, so I would say the bulk of the short covering is done and what we saw in volume today was what buying looks like: not so hot for today.

When it comes to the S&P, you might recall when we first discussed a trading rally there were two targets. The first was the zone of 1980 to 2000 and next was 2020. We are now into the 2020 area. Some might say 2060 is better because that's where the heavy resistance comes in; I would not argue with that, but you can see the S&P has a line right here.

Then there is that ancient index, the DJIA, which is into its first real resistance zone as well.

Finally, in terms of sentiment, there was a sense of towel-throwing today. It was the first day with the Index put/call ratio under 100% since the rally began. We also have our second reading in the ISE ratio over 100% in a week. Recall it had a mere three readings over 100% since late July.

All of this points to a short-term breather. Like last week where I knew my timing would be a bit loose into the low, my timing might be a bit loose now but it seems to me we need a breather.

Let me point out that the 10-day moving average of the put/call ratio is falling (bullish). The Hi-Lo Index is rising (bullish). The McClellan Summation Index is rising (bullish). And my own Oscillator says we can get a few more days of upside. So I am not bearish; I just think there is a higher chance of a pullback next week.

New Ideas

I had a typo last night when we looked at the chart of (CRM). I had $75 for a breakout but it should have been $76. My apologies.

Today's Indicator

The 10-day moving average of the put/call ratio is heading down.


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.

Layne Christensen (LAYN) acts terrific and has come off the bottom rather well because it barely missed a beat when it got to $7.50. But this one will be hard for me to get excited over because of the resistance that lives right overhead at $8.

I look at the chart of Cisco (CSCO) and think it can get to that resistance line without much trouble. To get beyond that, though, I think will take a lot more work, so let's call the upside limited to about $29 for now.

I realize that $95 is a support level that is quite clear for Gilead (GILD), so if you wanted to own it then the stop is quite defined. My problem is that declining trendline, which right now comes in around $108, but by next week will be $105 and the week after about $102. That leaves me with an uncomfortable sense that GILD might not break, but I'm not sure it's going anywhere special on the upside. The biotechs feel like they are still overowned and now a political football as we go into a big election year.

Regards, Helene Meisler

It's Just Like 2011 -- Except It's Not
Stocks in Focus: CRM, NOW, NVAX, SKX

The biggest difference is today's haves and have-nots.

10/07/15 - 06:41 PM EDT
Don't Be Surprised at the Pullback
Stocks in Focus: CVX, ANTM, BIIB, VMW, KATE, MDLZ, AFL

Though a rally may be on the way.

10/06/15 - 06:24 PM EDT

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