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By March 18, 2016 0 Comments

The Good, the Bad and the Volatile

The Market We got volatility, but not the kind I expected! I thought it would be on the downside, so that was wrong. I do have a list of complaints, though. But let’s begin with what was good about today. Breadth rebounded. In fact, even when the market went red midday, breadth held up rather smartly. This means the McClellan Summation Index continues to rise. It is back to having a cushion, enough to weather at least a down day or two. In addition, I remain disappointed that the number of stocks making new highs has still not exceeded 100, but with 98 new highs it wouldn’t take much to get that pushed over the line. I’ll call that a plus, especially since the Hi-Lo Indicator continues to push upward. Sticking with some positives, I am doing another one of my polls on Twitter and would love it if you would vote. The question is if we will close the month (and therefore the quarter) over or under 2050 on the S&P. If you vote (click here — and please do vote!), you can see how folks are leaning thus far (hint: they are taking the under). Each time they have done that, the market has continued to rally. Now let’s move to the complaints. Despite the better breadth, we discover the cumulative advance/decline line is a fraction below where it was just over a week ago. The S&P was around 1990 then and it is now at 2027. Remember that lagging breadth eventually leads to crummy indicators and crummy indicators eventually lead to poor markets. But so far, we have no rollovers. The Russell underperformed again today. Remember, the market did so well when the small-caps were the leaders. Once they start lagging, it eventually plays catch-up in the market overall. The number of stocks making new lows on Nasdaq today increased to 59. Oh sure, 59 might not seem like a lot, but it is the most this index has seen since late February when it was significantly lower than here. Also, please recall a week ago when I said that on the NYSE there were just a handful of stocks making new lows, so I wasn’t concerned, but if we started to see 50 or even 100, I’d get concerned. Well, Nasdaq just went over 50, so yes it’s concerning. I do not see sentiment as giddy, though. I see it as slow, grudging acceptance of the rally. I have seen several folks start to give levels that would make them turn bullish. There is a gap at 2040, so I suppose all eyes will be on that. For my part, the concerns are mounting but not enough to make me bearish. I still think declines will lead to more rallying because the indicators will need to roll over before I am that upset with the market. But today’s statistics will still have me looking for higher volatility in the days ahead. New Ideas The question came up if I still like ProShares Ultra VIX Short-Term Futures ETF (UVXY) even though it fell apart. I said I would not like it under $ 27 and would stop out under there. It doesn’t mean I wouldn’t be willing to go back to the well and try it again here at $ 25. I’d give it a bit of leeway to $ 24.75 as a stop, and again I am only looking for a few dollars as a pop.

Today’s Indicator The Volume Indicator is overbought, having tagged 57% and now heading down.

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 Top Stocks is not intended to provide personalized investment advice. Email Helene here. Lockheed Martin (LMT) has been mostly sideways for the last three weeks. If it can get through $ 220, the shorter term would get stuck at that $ 225 resistance, but ultimately I would expect it to work its way to the $ 235 level. …

Click to view a price quote on UVXY.
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