Wednesday saw large opening gaps down by the indexes and they will need filling. NYSE volume yesterday stood at 95% to the downside, P&F sell signals were 12x the buys, a proper wash-out session. When financial doom and gloom appears on my local newsfeed here in Hawaii, it nearly always signals a sell-off is in the final throes (nervous hands having already hit the sell button). The indexes themselves are largely unscathed by recent volatility. Snap-back expected. Sector to watch, the Nasdaq Bank Index chart.
The NASDAQ 100 maintains upward P&F direction despite Wednesday’s 3.1% drop. To turn down, a box fill at 7400 is needed, over a percentage away from Wednesday’s close. With the trend remaining up, two bullish breakouts since the Low Pole at the start of the year, there is no technical reason to sell the index here.
The S&P 500 dropped 2.9% yesterday, closing just above last week’s lows. The Point & Figure chart is a safe distance away from a sell signal, 2700 is needed. This chart too is not flagging a top here, rather a natural healthy retreat has occurred. Weakness may be attributed to bad news – if it were falling on good news we would be concerned.
Short-term breadth, the NYSE % 10-week moving average, turned south on Wednesday. The indicator has returned to its recent low. It will need to reverse up soon to avoid a drawn-out basing process as per 2018. To turn up, 34% is needed.
Medium-term breadth, the NYSE Bullish %, remains in its consolidation beneath neutral, underway for the past four months. A sell signal would print at 38% and if that were to occur, downside follow-through would be essential for validation. No follow-through would point to a Bear Trap.
The Nasdaq Bank Index chart printed a Triple Bottom sell signal on Wednesday with a drop of 3.9%. If long, we would not be too worried for the time being. Lateral support lays across 90 plus a Bullish Trendline is at hand. A 3 box reversal up from here would certainly be worth following.
The Nasdaq Bank Index chart, relative ratio versus the NYSE Composite, displays a series of sell signals since the start of 2018. However, a wide rising channel has formed over the past decade, and the ratio is nearing the floor of that channel.
The PHLX Semiconductor Index printed a 3 box reversal down on Wednesday, and although the chart is on a sell signal, the general trend remains up. Present weakness is nearing potential support from the 30-week moving average. Unless another sell signal prints, via a box fill at 1380, we would see the present retreat as an opportunity.
The relative ratio, against the NYSE Composite, remains on a buy signal, consolidating the long-term uptrend. The current down O column is not a concern.
USB [PRICE DOUBLE TOP | SECTOR RELATIVE DOUBLE TOP forecast] | Target = $68, Stop = $49
US Bancorp chart is on the retreat yet remains on a buy signal. Results mid-July were a beat. Bullish Trendline support is nearby, as is the 30-week moving average. The $50 level also offers horizontal support.
The USB chart P&F relative ratio, against the S&P 500 Financials sector, has upward direction. Long-term outperformance potential, as the ratio rises off the bottom of a decade long range.
AAPL [PRICE DOUBLE TOP | INDEX RELATIVE TRIPLE TOP] | Target = $315, Stop = $192
Apple stock chart analysis, remains in a good field position, consolidating just beneath its record high of last year. The June buy signal holds; a sell signal would occur at $192. Present price weakness is a chance to add.
This month the P&F relative ratio, versus the NYSE Composite, printed a Triple Top breakout. Steady outperformance trend underway since 2016.
NKE [PRICE LOW POLE | INDEX RELATIVE QUADRUPLE TOP] | Target = $90, Stop = $77
Nike stock chart analysis, traded sideways since March, beneath its record high. The volatile range has seen a High Pole, with a Low Pole either side. As trading is at the lower end of the range, plus Bullish Trendline support is close by, now may be the time to consider longs (risk-to-reward ratio is favorable).
The relative ratio, versus the S&P 500, activated a Quadruple Top in December 2018. The ratio has since retreated, with no sell signal so far.
ANSS [PRICE DOUBLE TOP – forecast | SECTOR RELATIVE DOUBLE TOP] | Target = $225, Stop = $194
The Ansys chart is also consolidating just beneath its record high; digesting the recent earnings release. A Double Bottom printed earlier this month but that is likely just a result of volatility, part of the present bullish consolidation. When the market firms, this stock should have no problem accelerating to fresh record highs.
The ANSS chart relative ratio, against the S&P 500 Information Technology sector, trades at its best level since 2013. Outperformance should accelerate, given the trio of bullish breakouts in place.
IR [PRICE BEAR TRAP – expected | INDEX RELATIVE DOUBLE TOP] | Target = $130, Stop = $112
Ingersoll-Rand retreated off its record high of mid-July and has now traveled back to its 30-week moving average. Results were good at the end of July, perhaps triggering profit taking over recent weeks. A Double Bottom registered yesterday but being the first sell signal off a high, the move is dubious. Watching for a Bear Trap to print here, with the uptrend then reasserting.
The relative ratio, against the S&P 500, maintains a steady rising trend over the past year, with three consecutive bullish breakouts.
VTR [PRICE DOUBLE TOP | INDEX RELATIVE DOUBLE TOP] | Target = $84, Stop = $65
Ventas is holding up well during present volatility. P&F direction has been up since the buy signal on August 9th, preceded by a Bear Trap, shaking out weak holders. Results late July were a beat.
The relative ratio, against the S&P 500, shows outperformance since early 2018. Fresh Double Top breakout this month.