You Call That Selling? Check Out Bonds Where Things Are Really Moving
As Nvidia rallies at others' expense, it's not just bonds where things are getting extreme. Let me show you what's going on with gold, silver, and the dollar and what to expect from here.
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Oh sure the Russell 2000 was down a lot and the breadth on the NYSE was the worst it has been since August 5, the day the Yen Carry Trade collapsed, but was there real selling? Or maybe the question is: Was there the kind of selling we saw on August 5? No way.
I wouldn’t say there was no selling on Monday but it wasn’t enough to really register. It was more "drooping" than "selling." Yesterday we looked at the stocks making new highs and how they don’t expand on up days. Well Monday was a down day and while there was an uptick in new lows, I would not call it a real expansion.
So in that respect Monday was more of what we’ve seen for over a week now: a lot of shuffling around. Sure it felt like there was selling in the banks, and there was, but it wasn’t panicky. It felt more like an overbought pullback. Remember these overbought readings are meant for the "others" or the 493, not for beloved Nvidia NVDA. When Nvidia rallies it does so at the expense of the others. This used to be Apple’s AAPL job, but Apple has turned the job over to Nvidia now.
In any event, even the VIX, which I have thought should have a decent pop, has hardly budged as it struggled to stay in the green all day.
The only real selling was in bonds. I said last week that I thought they should give back some of the rally. I did not think they should give back all of the rally. And then some. But that is exactly what they did. TLT broke that line I have been drawing in, and is now fully into support.
With the Daily Sentiment Index (DSI) at 26 I wouldn’t argue too vehemently against those who think I am nuts to believe the bonds still have a rally in them but that’s where I stand. Maybe I’m being stubborn but the Utes barely got sold on Monday.
Speaking of the DSI, Gold’s DSI was 87 on Friday. Needless to say the action on Monday took it back down to 79 but be aware that Silver’s DSI is at 86 now.
Then there is the buck. I liked the buck at the lows and then gave up on it just as it started this massive rally. But now I want to highlight that there is very decent resistance in the 104.50-105 area and the DSI is at 77. So if it does keep on going to that line I would not look for a big breakout over it.
The bottom line on all of this is that while stocks have done a lot of sloshing about in the last week bonds, the buck and the precious metals have done a lot of moving around and some of the moves are getting extreme.
Finally I have spent a great deal of time on sentiment lately because I think several indicators are pushing toward extreme. Today I would like to add the 21-day moving average of the ISE Call/Put Ratio to that list. It is now back to where it was in mid-July.
That peak you see on the left side of the chart, above, arrived in January 2014, just after an awesome year in the market (2013) and just before a year of a lot of ups and downs in the market (2014).
