NOW Is When You Strike
Welcome to Rude Awakening for Tuesday, December 8, 2020.
Looking at the opening bell, we are seeing the market taking a pause.
Markets Hitting Resistance
The S&P is hitting some resistance around the $3,700 level, having a hard time breaking through.
The same is true of the NASDAQ hitting resistance at about the $12,450 level, although it’s looking a little stronger as it’s trying to push higher.
Both indices have just recently pushed to new all time highs.
Whether we continue to push higher or not, it still bodes well for the pullback we have been expecting…
This is the type of market we can expect to have a pause and a larger pullback, even if we do continue this march higher.
The Advance/Decline line on the S&P 500 is starting to flatten out and actually go negative. This means we are seeing more decline than advancement in buying on the S&P.
That hasn’t been the case for a while.
Similarly with the Dow, it’s pushing up to all time highs, but its A/D is going negative.
The strongest index has been the NASDAQ, sitting right at its new all time high, but once again, the A/D is flattening.
This is usually a precursor to the downside.
The Russell 2000 is now the strongest of all the markets. There has been no other market coming anywhere close to the appreciation we’ve seen in the Russell or its ETF — ticker IWM.
IWM is the most shorted index in the market right now.
This one too is finally flattening out and coming to the downside…
2 More Stocks to Watch in Today’s Teetering Market
We’re also watching Stitch Fix, Inc. (SFIX).
SFIX is absolutely exploding to the upside after reporting fiscal first quarter results WAY better than expectations. This one is up 36% on the day, looking to start giving some of those initial gains back.
It will be very interesting to see how SFIX closes today — another one due for a pullback, which could make it a good downside or shorting opportunity.
Then we have AutoZone, Inc. (AZO), which beat earnings and revenue expectations this morning, but is slipping in pricing on the day, down nearly 6% now. This is because they’ve paused their buybacks in favor of enhancing employee benefits.
It’ll be interesting to see if we could get a buy on AZO, given this big pullback.
That’s it for today folks.
Keep an eye on these three additions to the watchlist.
We’ll talk again tomorrow!
Editor, Rude Awakening