Lots of Negatives, but Volume Ain't One
Sure, volume was light on Monday. But other things are more concerning.
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We got a big day in the market just before we head into short-term overbought territory.
I know folks will complain that volume was light—it was. The QQQs had their lightest volume day since mid-July. But before you put light volume in the negative category, notice that the QQQs had no trouble climbing from late May through early July on volume that could barely get over 40 million shares.
This is one reason I fussed so much when the volume on the QQQs topped 80 million on August 5th. High volume on down days is ultimately bullish. But low volume on up days are –to me—simply just low volume on up days.
Sticking with volume, 83% of the volume on the NYSE was on the upside on Monday. Sure, there wasn’t that much volume, but what we had was on the plus side, and that is –again to me—more important than the overall volume.
So I don’t think volume is a negative here. If you want me to point out negatives, then we are short term overbought (intermediate term as well but that hasn’t mattered). Notice that the Oscillators are now back at the top of the page.
If you want me to point out a negative, it is that the number of stocks making new highs is still unimpressive.
If you want me to point out a negative, it is that the put/call ratio sunk to .75, the first reading under .80 since mid-July. So, folks are finally jumping back in with both feet. But the ten day moving average is heading down not up (that’s bullish).
Or, if you want me to point out that the Nasdaq will close a gap at 18000, which is less than 200 points from here. The Russell will fill its gap around 2180, just over ten points from here. The QQQs filled their gap on Monday.
And yes there are more gaps to fill on the upside, especially on the chart of the QQQs. But as I said yesterday, I would like to see a pullback before we venture up there. It would help the charts. It would shake some of this newfound enthusiasm for stocks. And it would stop this green streak the S&P and Nasdaq have been on (eight days so far).
Why do I hate these streaks? Because they take on a life of their own. And then it is all anyone focuses on. So, if they can end before too much fuss is made, we can resume a rally after a pullback. But my experience is that if we get far enough where it becomes nonstop chatter, it tends to kill the rally.
Remember the DJIA had a long streak just before a big spill earlier this year. Or last September the Utes had a nice long streak and then they fell ten-percent in a straight line. Best we never get to the point of fussing too much.
