Play It Stock By Stock
Pullback in
the Nasdaq. Somewhat deserved after its move off the lows of Jan. 3.
Perfect timing of “sell the news.”
Wednesday’s action was the first real
distribution day of the year in the Nasdaq. One day of distribution is
meaningless, just a wake-up call. A couple more days like it and start worrying.
Many old leaders continue to act very suspect. As I have been saying, play it
stock by stock.
In the meantime, more breakouts are occurring and some are actually holding the
moves. This is a welcome change as most have failed miserably over the past few
months.
With the Fed trying to jack the economy back up, a slew of retailers have broken
out of long bases. As always, respect the fact that not much has worked.
BJ’s Wholesale
(
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(
LIN |
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BBBY |
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all broke out of long bases.
I would be remiss if I
didn’t mention a very worrisome sentiment number. Keep in mind, this is a
contrarian secondary indicator. Stock price action always gets the most weight.
The percentage of bullish advisors rose to 61% yesterday. This is just about a
five-year high. Considering the major drop in the Nasdaq, it is amazing that
this number has not dropped. Why is this important? When this number goes to
extremes, most often, it means an opposite move in the market. Sixty-one percent
bulls is an extreme number.
Back at the lows of ’98, bears were coming out of the woodwork, practically
calling the bottom. During the past year, this wrong-way crowd has stayed bullish despite all the carnage. I would keep a keen eye on this number, as it
is certainly not calling for a major bottom at this time.