Records Continue to be Set but Breadth Divergences are Beginning to Form - Chaikin Analytics

Records Continue to be Set but Breadth Divergences are Beginning to Form

Types of Stocks to Avoid

In the pages below, we note that while breadth remains strong, there are some divergences that have caught our attention. With this in mind we want to ensure that stocks with the greatest potential for weakness in the near-term are avoided. Today we screen the Russell 3000 for names that meet the following criteria:

  • Stock Rating: Neutral Minus or Worse
  • Price Level: Overbought
  • Money Flow: Weak
  • Relative Strength: Weak

The screen returned 26 stocks which may be considered as sources of funds or should be avoided in the near-term. 

*Note, this screen was run before today’s update. Your results may differ but the concept is the same. 

Pre-Market Movers

Advancers: CRWD (13%), ZS (11%), HFC (10%), ESTC (8%), OKTA (7%)

Decliners: SPLK (20%), BPOP (7%), SGEN (3%), MRNA (3%), DHI (2%)

Market Commentary/Looking Ahead

US equities finished mostly higher on Wednesday after opening lower. Sector performance was mixed, with Energy leading. Communication Services and Financials also outperformed. Materials, the consumer sectors, and Technology lagged. Treasuries were mixed with the curve steepening with and reports highlighting 18-month highs in inflation breakevens. The dollar was stronger vs the yen but weaker on the euro cross. Gold finished up 0.6%. WTI crude settled up 1.6%.

The SPDR S&P Capital Markets ETF (KCE) traded to a new all-time high yesterday. The fund has a Bullish Rating and has been a strong outperformer since early October. KCE is overbought in the near-term but should be a source for bullish ideas into the end of the year. Below are the 24 stocks that currently have Very Bullish or Bullish ratings.

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