To understand why Barchart’s Senior Market Strategist John Rowland, CMT, sent me an email with the subject line “Another frozen iguana” this morning, some context is required – but it’s worth the journey, I promise. Especially when the frozen iguana in question is none other than $4 trillion dollar monster Alphabet (GOOG) (GOOGL), which John has previously described as “the ‘Big Oil’ of AI.”
End of the Road for GOOGL?
When the Google parent showed up on Barchart’s End of the Road screener today, it was certainly notable on a single-stock basis. A trend reversal filter, this screener looks for gap-down activity “after an exponentially expansive rally, signaling an abrupt end to the uptrend.”
This screener is a good starting point, says John, but confirmation – as always – is needed:
“First, if the initial gap falls to and below the 50-day moving average, that is a pretty sure sign of more pain to come. Most of those stocks will continue to fall to their 200-day moving average before recapturing their 50-day moving average.”
“The other thing to watch out for is a gap down that was not caused by an earnings announcement. This is typically a recognition by the market (sellers) that something (sentiment) has changed swiftly, resulting in a major correction to come.”
But where do iguanas come into this…?
In more recent weeks, John has been using this screener as a broad indicator:
“With the EotR screener, most days you'll get maybe one or two candidates – and those are mostly event-driven. On days where there are multiple results, and those candidates represent a wide range of industries and sectors, this is a good indication that something larger is underfoot.”
So, just like the cold-stunned iguanas falling out of trees in Florida are a symptom of historically low temperatures in the Sunshine State, John says the recent appearance of market heavyweights like Nvidia (NVDA), First Solar (FSLR), AstraZeneca (AZN), 3M (MMM) and now Alphabet on our End of the Road screener is a broader red flag worth watching.
And in the case of Google, he deadpans, “the lizard is Godzilla-sized.”
Get Your Vuvuzelas Out on Ball Stock
We’re not going to belabor the point about a secular bull market in industrial metals – not today, at least – but oh man, did that thesis on Ball (BALL) play out pretty quickly, or what?
In case you missed it, John was looking for a breakout in the beer can manufacturer, based in part on a compelling fundamental backdrop ahead of this year’s World Cup, as well as a tidy chart setup.
Does “trending toward the $60+ area” feel like an understatement in retrospect, John?
With BALL delivering an entire bull market since his callout a few weeks ago, “I sold my calls too early,” he notes, humbly.
In all seriousness, here’s the Tuesday note from John on BALL after the stock popped on earnings:
“I would like to see it hold these gains and close above $60 on a weekly basis. In the meantime, I will most likely sell some Feb covered calls just above the current price, while covering only half my long call position.”
Fuel for Friday’s Discussion
Market on Close is set to go live this Friday, Feb. 6, at 3:30 PM Eastern (2:30 Central), and John is already getting his agenda ready.
Rowland’s gathering his notes on a large options trade in one ETF whose recent “explosive move only adds fuel to the idea that the market is heading into a corrective phase,” he says.
It’s not QQQ, by the way, but I feel very confident that QQQ and this absolute breach of duty at the 100-day moving average will be discussed:
For the full agenda, here’s my best advice:
- Sign up to be notified when Market on Close goes live
- Watch the livestream on our official Barchart YouTube
Hope to see you there, and watch out for falling iguanas in the meantime. For more from John Rowland, here’s how to invest in the AI data center pushback:
On the date of publication, Elizabeth H. Volk did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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