Here is tonight’s take on the markets, purely from The PPT‘s viewpoint. I write this summary of the days events daily inside the club, aka The PPT, and offer the lot of you a small hole to peer into, considering the holiday season and all.
A great man once said “you owe me.”
Last week’s SPY and QQQ oversold signals worked almost to the exact day. It was discussed, ad nauseum, that the market, according to The PPT, should be higher by Tuesday or Wednesday of this week, based upon the 5 day hold principle. Moreover, I pointed to AAPL, and SVXY OS signals as de facto overall market oversold points. Well, the pressure gauge went to the extreme and recoiled fiercely today in grandiose fashion.
It was an 85% breadth day, with just 2 out of 196 industries below 50% breadth. Amazing.
There were 88 industries that gained more than 2%. It was a short killer day.
AAPL was flagged OS everyday since 11/8, with the stock ranging from $527 to $558. With today’s 7% move, every OS signal was validated.
What is The PPT saying now?
The Overall Hybrid overbought level is 3.23 for the 3 month algo, which is comfortably higher than today’s closing score. It’s also worth noting that there weren’t any significant overbought signals in the macro ETF land tonight, with only three of minor interest: WOOD,CORN and HAO.
There are over 400 stocks flagged Hybrid Overbought on the 3 and 6 mo algos and 379 on the 12. Overbought stocks of note are: FTK, ENR, GS, LNKD, ANF and FOSL. Keep in mind, most of these stocks start to show weakness after the 3rd day of being flagged OB. Therefore, it is possible for them to stay flat or run higher until early next week.
What can move next? Let’s have a look at today’s laggards that were beaten to death over the past 1-2 weeks.
Criteria: 1 week return under -5%, daily change less than flat, market cap over $1 billion with average daily volume over 500k.
If I was a betting man, the safest bets will be stocks with mammoth short positions, breaking out with technical scores.
Here are heavily shorted stocks with technical scores over 3, primed for squeeze.
And here are heavily shorted stocks with technical scores under 2, not primed yet, but can get there if this run continues.
Bottom line: It was a much needed respite. Mostly everything traded up big and now the market has to prove that it is serious about moving higher. I’m not focused on industry breakouts yet, because it’s only one day of upside. However, I am sticking to my belief that silver will outperform most industries, due to temporary reflation, and will look to rotate out of EXK into tech or cash as the rally matures. The PPT validated all of the oversold signals from last week and does not point to any imminent danger in the markets. Purely from a observers standpoint, this market looks like it wants higher, before it can figure out how fucked up the world is right now.