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Top Stocks With Helene Meisler

Bulls Are Shorn of Their Horns

By Helene Meisler | 2017-02-23 18:35:23.0
Stocks in Focus: X, XLU, IYR, RRGB, ABBV, GDX

The Market

The biggest change in the market today, at least to my eyes, was how many folks who were so over-the-top bullish last week pulled in their horns. Today bothered them.

What exactly about today bothered them? I can only speculate, but here's what I heard. The lagging Russell was one of the top reasons. Why today and not before today? Again, it's pure conjecture on my part, but the ratio of the S&P to the Russell did make a higher high today. But as far as underperformance, the Russell has been lagging since early December, so why today and not before today is a question to me.

Another guess on my part is the industrials. These stocks took it on the chin today. U.S. Steel (X:NYSE) was down nearly 8% on the day. That's a lot, even for Letter X. I suspect it bounces off that line near $34, but now you can see why I shy away from stocks with high bases.

Perhaps another reason was that today was the second red day in a row for Nasdaq. This is the first time this year Nasdaq has had two consecutive red days. Hard to believe, isn't it? But yes, I believe this, along with the downside in the semis, helped the anecdotal change in sentiment. And it is anecdotal only for now.

Finally, I still cannot believe no one seems to care about the transports. I mean, everyone loves this group. The transports are a smidge below where they were in December. Maybe it's because Warren Buffett likes the airlines, I don't know, but the transports are down 2% and no one even mentions them. Remember, the other indexes are at all-time highs.

As for sentiment, that's only anecdotal because the put/call ratios continue to show no fear in the market. So I think today changed some minds. If there is any follow- through in market weakness, perhaps that anecdotal evidence will morph into statistical evidence.

New Ideas

Today was the day folks finally recognized the utilities have been terrific. And while I still like the Utilities Select Sector Fund (XLU), I think it is a bit stretched and would like to see it pull back.

I still think the iShares U.S. Real Estate ETF (IYR) has another push higher in it. I am eyeing that spike high near $82.

Today's Indicator

The 10-day moving average of the put/call ratio is quite low, but it hasn't turned up yet.

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.

I am showing you a big-picture chart of Red Robin Gourmet Burgers (RRGB:Nasdaq) because if this wasn't a restaurant -- er, fast-food joint -- I'd probably love the chart because it does look like a long-term bottom. So forgetting what the stock is, I would say that as long as it stays over $47, then a breakout over $52 measures to $58.

AbbVie (ABBV:NYSE) has lagged many of the other drug stocks, but its chart continues to look decent to me. At the very least, it ought to make a run at $64.

I was asked to follow up on VanEck Vectors Gold Miners ETF (GDX). When we last checked on it, I drew in a pattern where it rallies to resistance ($25 to $26) and then pulls back to form the right shoulder of a head-and-shoulders bottom. I think it is in that process now. My sense is it is a bit too soon for it to have completed the left shoulder. I would prefer a shakeout either down a bit more or more time. At about $23, I would get very interested again.

Regards,

Helene Meisler
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