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Top Stocks With Helene Meisler

Nasdaq Nearing Overbought Status

By Helene Meisler | 2017-04-27 18:40:39.0
Stocks in Focus: JUNO, ACIA, UPS, IP, IYT

The Market

Here’s something interesting. As you might recall Tuesday, an up day in the market, saw a marked change in sentiment. Wednesday looked like a breather so sentiment stayed ultra bullish. Thursday arrived and we saw another flat day and the put/call ratio went up. Oh it didn’t exactly soar, but the equity put/call ratio rose to 72% which is the highest reading since April 13th, the low. Were folks concerned about the earnings that we saw after hours, in all those fan faves? Maybe.

The day was incredibly sloppy. Breadth was flat which is good but net volume was really pretty ugly on the NYSE as it lost about 850 million shares.

Nasdaq remained steady eddy though. Net volume has been positive there for 8 of the last 9 trading days. That means Nasdaq gets overbought next week. It is possible that the Fan Faves -- Amazon (AMZN:Nasdaq), Facebook(FB:Nasdaq), Google (GOOGL:Nasdaq), Apple (AAPL:Nasdaq), Netflix (NFLX:Nasdaq), etc. -- can keep Nasdaq lifting forever and a day, but it seems to me by midweek next week the overbought reading will call for a rest or a pullback.

I want to revisit the chart of IYT, an ETF to be long the transports. It did fill the gap and rally today. Now it needs to stay over the red line (essentially the area of today’s low). A failure to do that will have me concerned.

New Ideas

I was asked about International Paper (IP:NYSE) which I had been pretty bearish on from February. It did fall but has since soared and today it broke out over the recent highs. There is a gap to be filled near $56 but I suppose dips back toward $54 should be good now. I should have noted IP’s improvement last week when I liked Packaging Corp (PKG:NYSE), a related stocks.

Today’s Indicator

The 10-day moving average of the put/call ratio is heading down. Once it gets down into that 80% area these last few years it has meant the market is overbought. Looks like that might come our way next week.

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.

There was a time I had high hopes for Acacia (ACIA:Nasdaq) but it could never manage to make a higher high and has remained in this downward channel. I would look for a bounce off that lower line. Until it fails to tag one of the lines, the channel remains in effect.

I believe Juno Therapeutics (JUNO:Nasdaq) has earnings coming any minute now, so there is a risk. There is also resistance right here. If it can get through resistance then the gap fill, which is also near the downtrend line (around $29 - $30), becomes resistance. I still prefer iShares NASDAQ Biotechnology Index (ETF) (IBB:ETF) instead of individual stocks in this group.

Now that United Parcel Service (UPS:NYSE) has gone nowhere since we last checked in on it, I was asked about it because of today’s outside reversal day. That is very impressive and layers of resistance remain.

However that gap has a chance at being filled. I would use a stop under $107 because you don’t want it to give back too much. I remain mostly lukewarm on this stock.

Regards,

Helene Meisler
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