Monday had something for everyone.
Let’s start with how dull the market was – even with the pop and drop. The bulls would say never short a dull market. The bears would say the market can’t hold onto a rally.
The bulls would say the put / call ratio was high at 1.05. The bears would say the 10-day moving average is now at .97, down from 1.16 at the lows a few weeks ago.
The bulls would say Nasdaq’s new highs was the most since early April at 66. The bears would say that early April saw an increase in new highs and we went down anyway.
The bulls would say the 10-day moving average of New York Stock Exchange’s new lows has breached not only 100, but is now lower than it was in late March / early April. In the spring, it was 86 and now it is 78. I do expect this will bottom out later this week.
The bears would say that the NYSE Hi-Lo Indicator is already at .45 and it peaked at .51 in March / April.
The bulls would say the 30-day moving average of the advance / decline line is not yet overbought. It still has room to get over the zero-line. The bears might nag that despite a 10% rally, it hasn’t gotten over the zero-line.
The bulls might say that the transports were solidly positive on Monday. The bears might say: Look at interest rates back over 3%.
I would say that the Daily Sentiment Index (DSI) for bonds nudged down to 10 (I am surprised, needless to say) from 11 where I thought it would get to single digits. I would still think any rise in rates this week will take it to single digits and provide a reason for bonds to rally (rates to fall).
The bulls would say the McClellan Summation Index is still rising. The bears would say the Russell 2000 got a smidge over 1900 (1903) and couldn’t hold on, because there is so much resistance in that area (see Monday’s column for a full discussion of the Russell and its resistance).
I think this bull / bear debate is the nature of what happens when the market reaches resistance and gets short-term overbought. In other words, for the time being, the market is doing what it ought to.
You might notice that the Overbought / Oversold Oscillator has not come down much in this chop-fest. I would posit that it is possible / likely that late this week we will see the Oscillator head south (get oversold) in a meaningful way (it’s the math). If I am correct in that late this week, the market sells off that would set us up for an oversold rally again sometime next week.
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