Another wild day in the market, but at least the market is
now oversold as per the Nasdaq Momentum Indicator discussed
here last evening. I would have preferred if the market had
waited until the end of the week, but I won't argue against
it, since we were heading in that direction.
What we need to watch is the put/call ratio, though, as it
has been really high all day. It ended the day at 124%,
which is unbelievably high, especially for such a strong
market day. That would go on the bullish side of the ledger.
The flip side is that such a high put/call ratio pushed the
moving average of the ratio up, not down. Keep in mind that
the moving average heading up is bearish, while moving down
is bullish. What we have to watch for, for the rally to
continue, is that the ratio needs to turn down so that the
moving average turns down.
Then, we had 90% of the volume on the upside. Shockingly,
this came so soon after we had 90% of the volume on the
downside just last week. The last time that happened was
October of 2013, which is highlighted on the chart below. As
you can see, that was a low that just kept on going.
The same 90% upside days also occurred in the final days of
2012, and we know that 2013 was strictly a one-way affair to
What we don't have is the intermediate-term indicators
pointing upward or oversold yet. I find that bothersome.
They feel like they need more time to get to an oversold
condition. For now, we'll just call
this an oversold rally that should still give the market
some fits and starts, but it is likely to continue until
we get back to a short-term overbought condition.
Since there has been such a strong rally in the energy
names, I want to revisit Apache (APA), which we
looked at just over a week ago. At the time, I noted the
downside target had been achieved when it hit $56. It
subsequently went a smidge under $55, and then reversed and
had quite a day today. But I would like you to step back and
consider the longer term. It is possible that what we saw in
the last two weeks will turn out to be the head of a head-
Understand that would mean months of up and down. The first
trip would be up to fill that gap near $70, then back down,
and so on. It's too soon to tell, but this is a longer-term
possibility I have considered.
There are not many bases out there, but I saw the chart of
8x8 (EGHT) and thought it might be on the verge of
breaking out. The spike high at $8.75 will be a shorter-term
problem, but if it can take that out, the measured target is
near $10. I would use a stop below $7.75.
I was asked about Intercept Pharmaceuticals (ICPT) as
a bottom-fish candidate, and I will say it has one of my
favorite patterns: a W. It obviously needs to cross that
downtrend line and take out last week's high, but if it can
do that, then $160 ought to be doable in the near term.
The Volume Indicator is still not as oversold as I prefer,
but it is getting very close to an oversold condition.
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I really thought Las Vegas Sands (LVS) was trying to
bottom and improve in November, but I was dead wrong. It has
collapsed, maybe worse than oil stocks have. Today's
reversal is a step toward bottoming, but if it cannot
recapture that lower channel line, then the trend would
SunEdision (SUNE) is an interesting chart, because it
is in the process of filling a gap, yet it left an island
overhead in early November. I think it should bounce from
here during an oversold rally, but if it breaks below $18, I
would not want to be long it anymore. I am uncertain on
where it can go on the upside, as there is resistance all
the way up. The stock has not done enough work on the
downside for me to believe it can clear resistance easily.
Earlier this year, I had been a fan of the big base on
Clorox (CLX), although I did not like when it broke
that uptrend line. The target had been in the $100 area, and
that's where it got to. It has now spent two months milling
around this area. I am not a fan of buying stocks at their
highs like this, especially in this volatile market. But if
it breaks out above $102-ish, it would measure another four
points toward $106.
FOMC meeting days tend to be volatile.
The ruble collapse is part of the oil fallout.
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