The Either/Or Market Rages on Despite Blue Wave Rally
A decisive victory by Democrats lifts the market, but not all stocks. The top five most active were all down along with the Semiconductor Index.
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One might think, just by looking at the statistics, with breadth up and the S&P up so strongly that Wednesday was not an Either/Or Day. That would be correct except for the fact that –and I am not sure I have ever seen this—the five most active stocks were all down on the day.
It seems you can rally the semis but not Apple. Or you can rally Apple but not the semis. Or you can rally the semis but not the others, and so on.
While the SOX did not end the day down four percent or more, I saw Bespoke Group with a statistic that there have only been two other times that Nasdaq was up one percent while the SOX was down four percent or more. Long-time market players will see those two dates (it is only two dates, but…) and they will (or ought to) know the dates. March 30, 2001 and July 22, 2008. Yikes.
In the meantime, I said I thought the market could rally Wednesday/Thursday and then come down again. I was referring to Nasdaq because it was when we were looking at the Nasdaq Momentum Indicator.
So, what if we apply it to the semis and we get some more downward movement in the SOX in the coming days? Maybe the SOX even tags that support area I’ve highlighted around 9500? And wouldn’t –this is all theoretical—the chart of the SOX, if it did get down to those lines, resemble that Sentiment Cycle chart as it headed into Panic?
My point is maybe over the next few days we get some panic in the SOX. Maybe it’s enough to get us to find a reason to buy it for a trade, because surely the SOX bulls will be filled with despair by then should such a break occur.
I mean, I even heard someone on television NOT scoff at the staples on Wednesday. I guess it’s no longer bearish if the market is led by staples and not semis. That has been the predominant theme since the staples began lifting a month or so ago. Yet I heard nothing of the sort on Wednesday. It’s funny the way prices change sentiment, isn’t it?
The bears in the Investors Intelligence survey notched up to 18.5%. This is still a very low number, but it is the highest since last spring. Unfortunately, they did not come from the Correction side of the ledger but rather from the bear side. The bull/bear ratio is now 2.3, so it has come down quite a bit, having been kissing 3.9 a few months ago. Readings close to 1.0 are bullish.
