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Top Stocks With Helene Meisler

Nasdaq Gets Way Out of Line

By Helene Meisler | 2017-05-22 18:31:48.0
Stocks in Focus: UUP, OCLR, RSX, JNJ, CB

The Market

If you ever sit and watch the market trade all day, you can often see how there seems to be so little trading throughout the day. For example, the S&P was at 2392 on the open and closed the day at 2393. That’s a lot of hours of sideways.

The Russell gained approximately three points since a few minutes after the open. Nasdaq was the winner when it saw an increase of about 15 points after the open. So let me tell you what struck me about Nasdaq today as odd.

Nasdaq was up 28 points on Friday. Net volume was +820 million shares. Not impressive, but nothing to be upset over. Monday, Nasdaq rallied almost twice what it did on Friday; it was up nearly 50 points. Net volume was +720 million shares. Huh?

Shouldn’t we see an increase on a doubling of the point increase? I think we should. But perhaps it doesn’t matter since the overall cumulative volume chart is in line with the index.

My point is that overall the breadth for Nasdaq using volume has been in line, but today was very far out of line. Keep in mind that 150 stocks made new highs for Nasdaq today. Last week before we tumbled on Wednesday, there were over 220. A new high for Nasdaq might get us to 220 new highs, but so far they are lagging in a big way.

This means we continue to have a narrow market. If we are going to get a market where there are more stocks participating on better volume, we will need to see it spread and not stay so focused.

And then there is sentiment. After two days of high put/call ratios, we saw the Equity put/call ratio slip back under 60% today.

Nasdaq is into some overbought territory, but nothing to get upset over. The NYSE continues to point to an overbought reading near Memorial Day.

New Ideas

Last week, we discussed the dollar and how poor sentiment was on it. It’s gotten even worse in terms of sentiment, but also perhaps because it has collapsed even further. PowerShares USD Index Bullish (UUP:NYSE), an ETF for being long the dollar, closed at its high today and I heard no one even mention it. It’s hard for me to believe that with the Daily Sentiment Index (DSI) at 5% (meaning a mere 5% are bullish) we will not see a decent bounce, but so far I am dead wrong.

I want to follow up on Oclaro (OCLR:Nasdaq), which we looked at a few weeks ago. I was unconvinced it was going to do well unless it managed to get up over $8.50 and hold it. It has managed to do just that and now finds itself into resistance. Typically, this would be my kind of chart, down and out and starting to come off a bottom, but lately these charts haven’t worked. A move over $9.50-%9.75 would obviously improve it even more.

Today’s Indicator

The 30-day moving average of the advance/decline line will be back to overbought near Memorial Day.


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 looked at VanEck Vectors Russia ETF (RSX:NYSE), for being long the Russian market, a few months ago just before it fell to $19. At the time, I said I would like it around $19. It has since lifted off that area but hasn't gone very far. It remains in a triangle, but I still think it is a decent chart as long as it stays over $19-$20.

Johnson & Johnson (JNJ:NYSE) has been a favorite of mine since February. It has taken a few months off while it corrects, but if it can get up and over this $128 area, it would look as though the correction was behind it.

With Travelers (TRV:NYSE) improving (see Monday morning's Letter), I was asked about Chubb (CB:NYSE), which I also find to be an interesting chart on the long side. Through $140, the next target would be near $144 to $145. The one caveat is if it can't get through or it trades under today's low, I'd get quite concerned.


Helene Meisler
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Chart of I:DJI
DOW 20,894.83 +89.99 0.43%
S&P 500 2,394.02 +12.29 0.52%
NASDAQ 6,133.6182 +49.9149 0.82%