Market breadth remains supportive of all-time highs (ATHs) in major and minor stock indices. Bullishly, breadth for the majority of indices continues to lead price, as has been the case since the secular bull market began in 2009. Indeed, the average stock just doesn’t seem to care about negative headlines. How stocks react to good and bad news is a pretty good tell -- and right now, the market is simply ignoring a tough news flow.
The S&P 500 (SPY) and the S&P 400 MidCap (MDY) advance/decline (AD) lines both moved to ATH’s last week. The NYSE common stock only and the S&P 600 AD lines are very close to ATH’s. At the same time, the S&P 400 remains almost 4% from its ATH from September 2018, and the S&P 600 is a remarkable 13% from its August 2018 ATH. As we have said, it’s hard to get too bearish with this underlying strength.
The percent of “500” stocks above their 50-day average has jumped to 64% from an October low of 33%. The percent over their 200-day has recovered to near 68% from 55% earlier in the month. Generally, we do not see major market trouble until the percent over the 200-day falls to 45% or lower. During strong, trending markets, this gauge usually stays above 60%. Lately, it has been oscillating between 50% and 75%.
The NYSE common stock only New Highs-Lows remains above the 50-day average and on a buy signal. The S&P 500 Bullish Percent Index has rebounded to 60% from 53% a few weeks ago. During a trending market, this measure will stay north of 65%. (Mark Arbeter, CMT)
American Express Co. (AXP)
American Express provides charge and credit cards as well as travel-related services to customers worldwide. Its product portfolio consists of charge- and credit-card products; expense-management products; and consumer- and business-travel services.
AXP remains in a correction that started in mid-July. The stock peaked at $129 and fell to $111 on October 3. While it fell slightly under the 200-day average, the stock bounced quickly above this key average. In recent days, AXP has oscillated around its 50-day average. The recent decline bullishly held the breakout area from earlier this year. If the shares can take out trendline resistance off the peaks since July (in the $120 area), we could see a move back to old highs and possibly into all-time-high territory. According to Investors.com, AXP has decent Composite, EPS, and Group Relative Strength ratings.
Support sits near $111 and we would put a stop-loss just below that area. We would take profits at $129 or higher if the shares move beyond $126.
Intel Corp. (INTC)
Intel supplies the computing industry with the chips, boards, systems and software that are the primary components of computer architecture. The company also has expanded through acquisitions, although these businesses are now being reviewed -- and, in some cases, sold to other semiconductor firms.
INTC completed a bullish three-wave ABC pattern in early September. In addition, since late July, the shares appear to be tracing out a cup-with-handle formation. A break above $53.50 would complete this bullish pattern and open the door for a measured move to the April high of $59.60 and possibly into the low $60's. The major semiconductor ETF's (SOX, SMH) are at all-time highs (or very close), showing good relative strength in the industry versus the overall market. According to Investors.com, INTC has a strong Group Relative Strength rating and decent Composite and EPS ratings.
We would put a stop-loss just below support at $48.50. We would take profits in the high-$50's/low-$60's region if the break above $53.50 is successful.
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