Stocks: The Good, The Bad and The Ugly
The trends are the trends
In The Deep Dive on Tuesday, I lamented how the top-down sector work still showed the strongest sectors YTD (defensives, industrials) as leadership while few signs of trend changes had emerged in the worst-performing growth sectors like technology and communication services.
That theme comes through again from the bottom up. Of course, there are exceptions at the individual stock level (not all staples are leaders, some tech stocks are ownable), but the majority of long ideas are coming from the same sectors and the most concerning charts continue to come from the growth side of the ledger. It won’t be this way forever, and defensives lagging is a key signal we are looking for in identifying a market bottom. Unfortunately, we just aren’t there today.
Today’s report highlights:
Continued problems within the market’s largest growth stocks
More downside risk within REITs
Industrial stocks near 52-week highs
Long ideas within healthcare
Dispersion within consumer discretionary
Bulletproof beverage makers
Problems for Mega-Cap Growth Continue
Apple has broken
Apple (AAPL) hit its lowest level since June on Tuesday and was pennies away from making a 52-week low. However, the stock has already broken the $134 level I called out in last week’s report. This top measures to $90 ($180 - $134 = $46 of downside), but the range near $100 looks like a reasonable first target. Not a buying opportunity, and likely won’t be for some time.
Oversold isn’t a reason to buy Tesla
If that price target for Apple sounds too aggressive for you, let me remind you that Tesla is down 37% in just over two months since it broke down from the exact same pattern. The only positive thing you can say about this stock is that it is extremely oversold at 28% below its 50-DMA and 46% below its 200-DMA, the most ever.
Disney just HAD to get into the streaming wars
Anything remotely related to cable, television, or streaming is a flaming pile of garbage this year and Disney is no exception. However, the entertainment giant has seen some analysts throw in the towel recently (see table below) and is showing a bullish momentum divergence at a key range of support that has held since 2014. This is a really bad trend and a clear laggard, but if you wanted to take a shot, the Covid lows at $79 are your stop.
Will Amazon finally find buyers?
Amazon stock (AMZN) finds itself in a similar position as Disney stock. It’s sitting on 52-week absolute and relative lows, but in a big-picture support zone and trying to get back above its November lows. Could this be a bottom? Maybe. But it isn’t worth it to bottom fish a name in this poor a technical position when the macro picture is unchanged and other stocks are trending higher.
PayPal holding by a thread
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