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Top Stocks With Helene Meisler

Let's Not Call This a Low

By Helene Meisler | 2017-08-17 18:33:21.0
Stocks in Focus: PAAS, MO, WLTW, C

The Market

The question of the day was, is this your W pattern? The answer is I don't think it is the equivalent of the mid-April low that we looked at a few days ago. It might be more like the late March low. What does that mean? It means I don't think we have an intermediate-term low.

After the damage we have seen in the indicators, it would be highly unusual for the market to bottom within a week. Let's just look at what I call the Hi-Lo Indicator. It gets oversold when it gets down near 15%. It doesn't get down there often, but when it does that makes for a great buying opportunity in the markets as it tells us how grossly oversold things are.

Last fall it got down to 36%. It currently sits at 45%. What is important to me is that the S&P 500 is 2% off the highs and it is higher than it was in March and this indicator is lower. No, it need not test all the way down to 15%, but I can't imagine it turning up for at least another three or four trading days. OK, that's not the end of the world, but with other indicators showing the same thing, why be a hero?

For example, one of the indicators I watch on the intermediate-term side is the McClellan Summation Index. We see it get grossly oversold when it needs a net differential of +4,000 advancers minus decliners to turn around (as it did last Thursday), but at intermediate-term lows we typically see it require maybe +1,000 or less. I like to see it within a day or two of turning, and at +1,000 that's what we get. At the current +3,200, that's not what we have.

Now let me share with you the few positives that make me believe we will get to that sort of intermediate-term low. The Fear and Greed Index is at 19. Typically, once under 20 we're closer to fear than greed.

Today's decline did not make a lower low in the transports (yet!) or Nasdaq (also yet!). There was no expansion in stocks making new lows. That might be the first time I have written that in a few weeks.

The volume in the Nasdaq 100 ETF (QQQ:Nasdaq) was very high -- again (this is becoming habit forming!). Typically, high volume in the QQQ means a rebound is in the cards.

But I did not sense panic. For example, the put/call ratio for equities was 94% last Friday, but today it was modestly high at 78%.

I will wait patiently.

Note: I am traveling this weekend so there will be no Letter on Monday morning. If the market does something extraordinary on Friday, I will try my hardest to get something out on Monday. The next Letter will be Monday evening.

New Ideas

I typically hesitate when it comes to precious metals and their charts because they don't always move because there is a good or a bad chart. Yet the chart of Pan American Silver (PAAS:Nasdaq) is developing a nice base. I would not want to see it crack under $17.

Today's Indicator

The 10-day moving average of the equity put/call ratio has rolled over (bullish), but the 10-day moving average of the total put/call ratio has not.


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.

The good news for Altria (MO:NYSE) is that the measured target off that double top is $62 and the stock is around $64, so it ought to start holding and forming some sort of bottom in the coming weeks/months. But it will take a long time to overcome that resistance overhead. A good rule of thumb is if the top took six months to build, the bottom will take approximately that long as well.

Willis Towers Watson (WLTW:Nasdaq) hasn't done anything wrong, and while it has support just below about $147, there is also support all the way down to around $143. If it can stay over $147 until the market gets to an intermediate-term oversold condition, that would be terrific, but otherwise I'd call it a hold right now.

We have looked at Citigroup (C:NYSE) many times since it hit my initial target of $67 to $68 in late June, and each time I have said I am not yet ready to buy it again. I still feel that way. It is possible I would take a look at it near $65 again, but I'd like to wait and see. It would be best if Citi could spend a month or so trading sideways to develop a pattern that would then look as though it wants to launch higher, something similar to the way it acted from March through May (or even January through May).


Helene Meisler
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Chart of I:DJI
DOW 21,750.73 -274.14 -1.24%
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NASDAQ 6,221.9144 -123.1947 -1.94%