Hello friends,
Yet another week of chop lies behind us – the Nasdaq Composite (‘COMP’) has gone sideways for weeks, while mid- & small-caps (e.g. the Russel 2000 ‘RUT’) have yet again whipsawed after making a set of higher Highs and sold off rapidly:
After months of failing moves (e.g. DUOL, IOT), climactic action (e.g. SMCI) and a whole bunch of severely extended leaders, we are now witnessing the number of stocks in free price exploration (i.e. those making 1-year High price) waning against those making new 1-year Lows in price, while the VIX is trending up ever so slightly.
The largest concern remains the behavior of leading stocks. Though there are some holding up well (e.g. VRT, VST), a whole bunch of stocks that should not be expected to encounter selling supply have now significantly pulled back – NXT or ELF are prime examples, while the overcrowded NVDA is starting to experience widening volatility rather than the opposite:
Overall, the picture has not improved – leading stocks show imperfect price/volume action, trading character is erratic, new Highs are being met with reluctant supportive buying. Though not the worst of markets, it is largely devoid of strong stocks giving reliable low-risk entry points. The balance is still tilted towards selling rather than committed buying. For now, sitting on your hands should remain your go-to.
So long,
TGS