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Top Stocks With Helene Meisler

 Top Stocks

Can't Save the Market? Good

By Helene Meisler | 03/26/15 - 06:56 PM EDT
Stocks in Focus: IYT, AAPL , MYL, JIVE, SLCA

The Market

We saw a minor shift in sentiment today. As I noted yesterday, everyone was rushing to buy the dip as if they might never get another one; today they were rushing in as well, only the dip did not have the kind of follow- through they are used to. In the past, a down open that got bought would have seen the shorts run for cover so fast that the S&P would have been up 10 or more points on the move. Today it barely got to green before turning back down.

But you see, this is good news. It is good news because if you keep saving the market, you never get a proper cleanout. A proper cleanout -- such as we had in October -- can launch a rally that lasts longer than a week or two and one that can travel more than a few percent. But when no one sells because they expect higher prices to resume, then there is no reason to chase them up, is there? When everyone already owns stocks, who is left to buy?

So if you are bullish, what you don't want to see is another save. These saves, as you can see from the action since Thanksgiving, get us short, sharp 3% to 4% rallies and then they give 'em right back.

As long as we're on the topic of sentiment, the put/call ratio for the VIX was 20% today. That's an awful lot of folks betting on a higher VIX and a lower stock market. For the past several years, this indicator has been almost like a Holy Grail in the short term. When too many have loaded the boat with calls on the VIX, the market has done the contrarian thing and rallied, usually sharply, taking the VIX down hard. It worked like a charm in 2012, 2013 and even for the first half of 2014. Yet something changed in the second half of 2014.

In mid-September, we had a low VIX reading and there was no bounce. In late September, we had back-to-back days with low readings and the market went down anyway. We did not have another such reading until the day after Christmas, and the next day the S&P rallied two points and that was it, down we went. For now, I will figure that we should get a short-term rally out of it. That is more based on the fact that the S&P has been down four days in a row already, and aside from the groups that have been hit hard, there was not much selling in the market today.

But I don't think the rally -- if we do get it -- will last very long. I do not think we have any sufficient extremes yet.

The only thing I saw that was worth discussing was that the transports got to the 8600 support or $155 on the iShares Transportation Average ETF (IYT) and bounced. If it rallies and gets to $158 and dies, I would consider that negative for the transports. If it can get all the way to $160, then it's possible it's not as negative.

Think of this latest decline in the transports a bit like a race. The thick, flat support line is the starting line. It took only three days to get to the line; in other words, it ran its heart out getting there. If it broke the line now, chances are it would be exhausted and not be able to go very far (i.e., more like a false breakdown). If it now rests by rallying back to $158 and then turns down, it's as if it is getting a running start to cross that line, thus it has more energy to do so, thus a break of that line is more likely to stick.

If it makes it all the way to $160, it has the chance that, by the time it falls to $155 again, it tires out. So the bottom line is I think we can have a rally off these support zones, but I still don't see the kind of setup that makes me feel like this is a buying opportunity not to be missed.

New Ideas

I was asked if Apple (AAPL) is a buy because it did not take out the mid-March lows. Quite frankly, considering I don't love the market right now, I'm not so sure I trust AAPL, but if you want to trade it, then $122 is the stop and the target is that downtrend line near $127-$128. The best news I can offer for AAPL is that with the moves in biotech and the semis, everyone seems to have taken their eyes off this one for now.

Today's Indicator

The put/call ratio's 10-day moving average is still heading down, but it has been off by a few days lately.

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.

Mylan (MYL) has had a nice run and a decent pullback. My only problem with the chart is that it had an upside target of $64 and it achieved it already. I think it can have at least one more rally, although I'd prefer if the rally started from the trend line at $58. Either way, it should test that old high at least.

In the last year, Jive Software (JIVE) has had two gaps down (on earnings?) and one gap up, so put me in the "I don't trust it" category, especially the fact that the "base" is a mere six weeks in length. It can probably rally, but I suspect it won't get very far. If it makes it to $5.50, that'd be a lot.

US Silica (SLCA) is a much nicer chart to my eyes than JIVE. It has crossed a downtrend line; it has been basing for four months and it has made higher highs. It looks a bit overbought here -- it hasn't been down this week! -- so I'd be more inclined to buy dips in it, but it does look to me as if it wants to get to fill that gap near $40.

Regards, Helene Meisler

No Extremes, Except for the Selling
Stocks in Focus: IYT, GLNG, XLE, UBNT, TOT, LOCK

But the market could use some more fear.

03/25/15 - 06:59 PM EDT
Friday's Gains Are Gone
Stocks in Focus: XLU, CBI, MDR, SGMS, EWY

Market gets highly emotional -- and sloppy.

03/24/15 - 06:59 PM EDT

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