The Cumulative Tick continued to push higher, while the 20DMF sold off later in the day (day trading algos getting out.)
The IWM/SPY ratio pushed to the upper side of its envelope, which tells us that small caps outperformed. Hence, this move indicates hope for earnings growth (tax deal passed yesterday.)
This had been widely expected.
The only negative that I still see is the Yen strength.
Treasuries are pulling back, but sellers do not push prices down. This is also a negative.
Today is options expiration and next week is a short Thanksgiving week. There is not much negativity to be expected.
Overnight, the VIX Futures showed a hard bounce. Not sure what this is about. The rest of the Futures markets look OK to me. I believe that this is linked to options expirations or maybe to some rollover.
Conclusions:
Be long until after Thanksgiving!
A few trade ideas
Since I have some time this morning, I'd like to point to interesting ideas in the current context.
First, we have some short covering activity:
For example: BEAT and IRBT experience very strong buying after breaking down hard. This is typical short covering and could have legs until after Thanksgiving. These are not value stocks or even growth stocks. These are beaten down stocks that will be squeezed higher.
AAOI might be different because it is a profitable growth stock that broke down on AMZN fear. However it is strongly traded and can be bought for longer term hold. AAOI is stalling at resistance, but could break above rather easily.
On the short side, JCOM looks very negative. JCOM tries to turn itself around, but investors are not that confident.
We also have accumulation in income stocks, especially in the pipeline sector. I pointed out that sector yesterday and we can see that accumulation continued yesterday even though prices weakened. It is clear that this sector is not a good place to be in the current environment that is mostly riding Growth/tech/NQ8. But this money is not moving in without reason. These investors are probably looking at long-term income.
Accumulation in ENB/PAA and WMB increased yesterday compared to the previous day. However that accumulation still is not strong enough to fuel a short squeeze.
Below I show the Pyramid data of yesterday - at the top - and the day before yesterday - bottom - for these three stocks. I will start feeling that something could happen either if the whole sector breaks out or if accumulation reached strong levels (two green dots).
