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Top Stocks With Helene Meisler

Back to No-Man's Land

By Helene Meisler | 2018-04-23 18:54:09.0
Stocks in Focus: KORS, NFLX

The Market

It was the lowest volume day of the year for Nasdaq. I have discussed 2670 on the S&P 500 as the ‘breakeven’ for the year. It occurred to me today that Nasdaq’s QQQs, which is where the FANG stocks live closed the year at $156. They closed today just shy of $162. That’s better than the S&P but it’s still a big chop.

Had we seen the market come down early last week instead of late we could have set up for the intermediate term and the short term to be oversold at the same time later this week. Now it appears we will once again get one without the other which leaves us in no-man’s land.

There are a few things to point out from today’s action. The iShares Barclays 20-Year Treasury Bond ETF TLT is up first. It did bounce off support, but not particularly well. I still expect we’ll see it stabilize or bounce this week. If it can get to $120, it’s a good place to sell.

The Guggenheim Currency Shares Euro Trust ETF FXE broke today, under the long-term uptrend line. My guess is there is a rally attempt from the $117 area but it’s a sale back at the line ($118-$118.50).

Did you notice that despite the decline in the market today the VIX could not get on the green side much? Let’s review one more time how I expect it to trade going forward. Oh don’t look for it to be exactly but notice that I do not expect it to rocket up in the next week or so. It just seems to me it should take another few weeks before it is set to run upward. I guess that speaks of more up and down, or chop.

I stated last week I was not a fan of the PHLX Semiconductor Sector SOX as I thought the chart was building a top. It has now come down to its 200-day moving average line for the first time in nearly two years. The moving average line is still rising so at this point I would expect support at 1200 to hold (red line) even if it breaks the 200 dma. The question then becomes, will rallies back to the 200-day moving average line become a good place to sell?

If it breaks the moving average line and then rallies back and cannot get back over it within the next month or two then it’s a problem because the moving average line will likely flatten out this summer.

What we get from this is that the Semis are getting a little oversold, even if they look dicey. The bonds are getting a little oversold, even if they look dicey. This is similar to the way the banks got a little oversold last week and have rallied while everything else has retreated. Thus we can’t seem to get it all oversold at the same time and we end up with chop. So when I say I think we’ll rally again, you can see how I think we’ll rally. I’m not sure it’s going to be all inclusive.

New Ideas

Retailers were the place to be today on the long side. So let me revisit Michael Kors (KORS:NYSE) which we looked at last week. Of course I like that it gapped up today but it did not clear those previous highs. I think it needs to get through in a hurry if it is going to be a good stock. If it waits too long retailers may be negatively affected by higher gas prices.

I was asked about Netflix (NFLX:Nasdaq). I don’t much like the chart because it gave back the entire earnings pop but it is coming close to filling a gap and testing a downtrend line. It should bounce off that $310 area. That’s the best I can say about it.

Today’s Indicator

The 30-day moving average of the advance/decline line is discussed above. I expect it to be oversold midweek this week. The question is if the shorter term can get there as well. It looks questionable for that.

Q&A/Reader’s Feedback

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 know the housing market is good. I can see it all around me as starter homes get snapped up mere days or weeks after they go on the market. Yet I cannot for the life of me find a reason to like the homebuilders. Lennar (LEN:NYSE) has support here around $54 but that is the best I can say about it. I get the sense that if it has a crummy rally to $56 (red line) and fails there then the next time down it will break this support (black line)

The iShares MSCI Hong Kong Index Fund ETF EWH, an ETF to be long the Hong Kong market looks somewhat similar to the U.S. markets in that it held the February lows during the March downdraft but there are also lower highs in place. A break of that uptrend line --- a break like it means it—would, in my view, complete the top. Holding it would save it for now.

The iShares Barclays 1-3 Year Treasry Bnd Fund SHY is an ETF to be long the bonds of 1-3 years in duration. I suppose, like TLT (seen here Monday morning) it should enjoy a bounce from support but that’s the best we can say right now. My guess is there is a bounce from support. The question is how far can it go?

Regards,

Helene Meisler
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