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DJIA: 50,064
Those bad up days, bad… but oh so enticing. A bad up day is when the averages are up, but most stocks are not. Participation is the key to a healthy market, and when lacking markets get into trouble. That was a picture on Monday, and so too was the enticing part. The stocks that performed well performed well. There was plenty of money to be made, despite not having a very technically healthy day. Monday reminded us of a very old Wall Street story about a clock that was not very helpful. There was a wonderful party, everyone was having a great time, and everyone knew the party would end — but the clock had no hands. What we call bad up days have been rare of late, and one or two certainly won’t kill a market like this one. Indeed, lead times are unknowable and can be lengthy. Still, lagging participation will lead to problems.
Bad up days like Monday and bad down days like Tuesday thankfully are rare. This is not to say, however, there are not a few disturbances in the force. Stocks above their 200-day moving average have stalled in the mid-50s range, despite an S&P average that is some 8% above its own 50-day. A bit more worrisome is a spike in new lows, further reflecting a market dichotomy. None of this is terminal, but there is a short-term loss of momentum in stocks which differs from the message of the averages. Most worrisome might be the look of the 30-year, the technical term for which is UGLY. Meanwhile, stocks like HUT8 Corp. (HUT – 109) have changed stripes a bit, instead of powering bitcoin they now power the AI build out.
Frank D. Gretz
PLEASE NOTE: Unless otherwise stated, the firm and any affiliated person or entity 1) either does not own any, or owns less than 1%, of the outstanding shares of any public company mentioned, 2) does not receive, and has not within the past 12 months received, investment banking compensation or other compensation from any public company mentioned, and 3) does not expect within the next three months to receive investment banking compensation or other compensation from any public company mentioned. The firm does not currently make markets in any public securities.
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