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Top Stocks With Helene Meisler

This Market Lift Should Linger

By Helene Meisler | 07/30/15 - 05:58 PM EDT
Stocks in Focus: ESPR, XLE, UPS, UNP, AA

The Market

Today looked like a big churn day to me. The DJIA stalled out at its 200-day moving average. The breadth was essentially flat. And folks rediscovered their love for the haves, but not all of them, just a select few.

I still think we're oversold enough, or at least not yet overbought, that we are likely to stay lifted for about another week. That doesn't mean we have to go up every day -- I'd be shocked if we did -- but dips will likely get bought in this time frame. We saw how quickly this morning's dip got bought. That's what happens in oversold markets.

On a positive note, the American Association of Individual Investors' bears joined the Investors Intelligence bears by climbing to 40%, a reading not seen since the "taper tantrum" of 2013. The chart is shown below. On a shorter-term basis, the Equity put/call ratio was 50% today. Typically a reading under 50% and it screams to get cautious. Yet the 10-day moving average of the put/call ratio has turned down (which is bullish).

The bottom line to me is that I still think we could pull back, but we are not yet overbought, so for now I think we see pullbacks get bought. Once we get overbought, if the problems are still with us, I'd look for us to go back down again.

I do want to point out a few items with regard to Nasdaq. First of all, the Nasdaq Summation Index has barely turned up. That is very unimpressive. Nasdaq is mere points from a new high and its Summation Index has barely turned up. Remember, this indicator tells us what the majority of stocks are doing, so you can see the majority of stocks on Nasdaq are still going down, or at least not playing well on the upside.

Another way to show this is that today Nasdaq tacked on 17 points and net volume (up volume minus declining volume) was a rather poor +100 million shares. That's the poor breadth I speak of.

Finally, several have asked about oil stocks. I was so wrong for liking them in late June and they got crushed for a month. The last few days have lifted them, but in my view that's all I see right now: a lift. Unless the Energy Select Sector SPDR Fund (XLE) can recapture this $72 to $73 area, then this is going to be just another oversold rally. Even getting over the line doesn't turn them positive, it just removes some of the negativity.

New Ideas

I was asked if I could look at Esperion Therapeutics (ESPR) because it's a biotech stock that has gotten creamed of late. That looks like a top to me, but I would point out that it bounced from support today, so as long as it doesn't violate today's low, it has a good chance of getting back into that $70-ish area.

Today's Indicator

The AAII bears are discussed above.


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.

We've looked at United Parcel Service (UPS) before with an eye toward an eventual/potential breakout over this $102 area. It has gapped up so much and is now stalled there, so it might need some time to digest, but I continue to think that if it can get over that, the first target is near $106 to $109.

Union Pacific (UNP) would be a better chart if it could spend some time backing and filling between here and $95 so that it can flesh out the other side of the chart. That would set it up for a better move up and over $100. But until then, this is still a stock in a downtrend.

Alcoa (AA) is a chart we've looked at before with a target in the $10.50 to $11 area, but you can see how weak it has been in that it couldn't even bounce from there. The stock ought to start a bottoming process now, but until it gets up and over $10.50 it remains stuck in a downtrend. Over $10.50 would cross that downtrend line and would be the first time it is able to get up and over a previous low. That's what it needs for me to believe it, even though I think it should start that process.

Regards, Helene Meisler

Laggards Are the Leaders Again
Stocks in Focus: IYT, GM, MSFT, AAPL, SLCA

Make no mistake, market is still oversold.

07/29/15 - 06:13 PM EDT
In Today's Rally, the Haves Didn't Have It
Stocks in Focus: CLX, IYT, URI, QRVO, AVGO

And yes, I'd still like a W.

07/28/15 - 06:12 PM EDT

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Chart of I:DJI
DOW 17,745.98 -5.41 -0.03%
S&P 500 2,108.63 +0.06 0.00%
NASDAQ 5,128.7850 +17.0520 0.33%