1. NASDAQ
Stocks had a monster comeback this past week, but what was becoming clear was that fewer stocks were leading the charge, especially in the NASDAQ Composite.
The NASDAQ composite remained strong on an index level, but the percentage of stocks above their 50 and 200 day moving average was at 24% and 29%, respectively, very low levels. This tells us there were very few stocks participating in the NASDAQ rally.
Also, the cumulative look of the number of new highs minus new lows rolled over with the number of stocks rising regularly. It has only happened during periods the overall index was moving lower.
2. NYSE
The look for the stocks trading on the NYSE didn't seem as bad, but still, we saw the cumulative New Highs minus New Lows also started to roll over.
3. Utilities Vs Biotech And Technology
Also, there were signs of sentiment shifting from the more aggressive parts of the market to the safer parts. The XLU/XBI ratio showed that the Utilities Select Sector SPDR® Fund (NYSE:XLU) appeared to be breaking out against the SPDR® S&P Biotech ETF (NYSE:XBI), with utility outperformance over biotech only having begun.
Additionally, the Utilities have never underperformed Technology by this much EVER. That means Technology Select Sector SPDR® Fund (NYSE:XLK) is worth more relative to the XLU than even in the dot.com period.
Additionally, this chart shows a bullish divergence in the RSI had formed, which would suggest that utilities soon begin to outperform technology. On top of that, there was a falling wedge pattern, which also supported the bullish narrative for utilities. Of course, this doesn’t mean utilities rise; it could also mean they drop less.
4. S&P 500
The S&P 500 had a bearish divergence of its own, which formed, and I think we'll see lower prices in the days and weeks ahead.
5. Apple
Looking at Apple (NASDAQ:AAPL), we can see that the stock was very overbought and in a gamma squeeze. The stock should have some strong resistance around $181.25, and with an impulsive move higher nearly complete, I think the stock is likely to reverse back towards $145.
6. Alphabet
Alphabet (NASDAQ:GOOGL) had a bearish divergence pattern with an RSI in decline as the stock increased. I could see this stock trading lower to around $2,500 by the middle of January.
7. NVIDIA
What if NVIDIA (NASDAQ:NVDA) of today turns out to be nothing more than Cisco (NASDAQ:CSCO) of 2000. It is an interesting question. The charts were stunningly similar going back to then and comparing to now. When you look at the following chart, ask yourself, and be honest. Would you be a buyer of NVIDIA at these levels?
8. Advanced Micro Devices
Now another ironic stock is Advanced Micro Devices (NASDAQ:AMD). The AMD of today seemed to be following the path of Intel (NASDAQ:INTC) in the late 1990s very closely as well. I found this to be amusing.
But then again, you could make the same case for the S&P 500 of today versus the S&P 500 of the late 1990s. The paths were just amazingly similar.
It isn’t just the price charts that copy each other. It is the PE ratio too. The PE ratio for the NTM, for the S&P 500 of 1998 and today, follow a similar path for today. In both cases, the past charts tell us we are on the other side now, and over the peak, and that we were now entering the phase of multiple compression.
