If Only… But That’s Not the Market We’ve Got
Many things could have happened in the markets so far this week, but they haven’t. Here’s a look at where we are.
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Quite frankly, it would have been better if the market closed on the high of the day. It would have been even better if it had closed on the low of the day. But to close as it did, flat on the week, satisfied no one.
If it had closed at the high of the day, we could have measured the rally; we could have seen if breadth, which was good because, as you know by now, if tech goes down, money can flow elsewhere, and if tech rallies, it comes from the others, was really solid. Breadth was not solid enough to change any of the indicators, but it was okay.
If we had closed at the lows of the day, we could have measured the decline. We could have seen if there was real panic in the market. But instead, we get stuck with mild signs of bearishness. Let’s call it signs that bearishness is increasing.
For example, the QQQs once again traded nearly 90 million shares, having traded just shy of 100 million shares on Friday. The QQQs have a long history of enjoying low-volume rallies and high-volume sell-offs.
Just look at the entire rally in the QQQs from April until Friday: there was exactly one day where they traded more than 60 million shares. Now take a look at the decline in February and March and notice how often the QQQs traded over 80 million shares. Now we have two days over 90 million shares traded. That’s a lot of selling.
I should note that I have drawn a short-term line on the chart connecting the three sell-offs since early May. Is that support? Let’s call it light support. It’s not the best trend line I’ve ever drawn.
Then there is the fact that Nasdaq cracked well under Friday’s low, and the number of stocks making new lows did not expand to greater than what we saw on Friday. Friday had 290 new lows, and Tuesday had 253.
Two days ago, I noted that the put/call ratio had jumped to .97, a high reading we had not seen since early April. Tuesday’s rally brought us a reading of .96, and Wednesday’s wild ride brought us a reading of .96. I think we can say that folks are interested in buying puts again, after eschewing them in favor of calls for two months.
The ten-day moving average is still sitting on the bottom of the page, though. But it is lifting off those levels.
As is typical for me, I prefer when we don’t have group rotation and the Either/Or Market. I prefer when folks decide to throw out the baby with the bathwater, and we get 90% of the volume on the downside as we tumble toward an oversold condition. Lately, the market so rarely gives me what I want!
