Did Wednesday's Stock Market Action Change the Indicators' Trajectory?
Poor breadth, but the indexes were higher. Let's take a look at the indicators.
You're reading 0 of 1 free page.
Register to read more or Unlock Pro — 50% Off Ends Soon
I am sure the first thing you want to know is if the action on Wednesday, with the poor breadth with the indexes higher, changed any of the indicators. It did not. It takes more than one or two days to move the indicators. But that is why I calculate what it will take to turn them.
For example, the McClellan Summation Index is still rising. We came into this week with it needing a net negative 2400 (advancers minus decliners on the NYSE) to halt the rise. After Monday’s big day, that number went to -3200. Both of those numbers represent to me a good cushion, meaning we can have a few down days, and the indicator shouldn’t change.
After Wednesday, that number is down to -1700. That is still a decent cushion. It’s when the reading gets under -1000 that I start fretting that the cushion is small. You see, the net of the advance/decline line on Wednesday was -930, so when we get to the point that one down day can halt the rise in the indicator, that’s when I no longer feel there is a decent cushion.
The number of stocks making new highs hasn’t been great, and Wednesday is no exception. The number of new lows has been steady but not terrible. Nasdaq has been running at between 100 and 125 new lows. I think that’s high, but it hasn’t yet pushed out the range. What I am watching is if it pushes out of that range (i.e., new lows on Nasdaq start creeping up over, say, 130.) That’s partly because the ten-day moving average of new lows has started to creep up.
As you must surely know by now, I am watching the Hi-Lo Indicator. The NYSE’s is still flat to up with no rolling over (that’s good). Nasdaq’s has rolled over, and the uptick this week has seen no follow-through. I keep thinking it will have another uptick, but so far it has not. A lower high in this indicator, as we get intermediate term overbought (late next week) is a problem for me.
The Volume Indicator is already at 54%, which is just ‘this’ side of overbought. I expect it to be fully overbought late next week (upper 50s).
On the sentiment side of things, the Investors Intelligence bulls lifted, and the bears backed off. This is no surprise. It also does not include this week’s action, so as I have noted before, I expect this to show a marked change by next week. However, the big change right now is that there are finally more bulls than bears.
The DSI for the S&P is still at 76, and Nasdaq is at 79, while the VIX is at 19. Only the VIX’s DSI is bordering on extreme, while Nasdaq is knocking on the door. I should also note the put/call ratio was 0.70. This is the lowest reading since mid-February. We already know the options traders are bullish, but now we can see exactly how bullish they are.
Finally, I still see many shrugging off the move in bonds. They mention it but are seemingly concerned only in passing. Please note, though, that while the Utes logged in their sixth straight day on the downside, they did in fact bounce right off that 990 level I highlighted yesterday. Let’s see how far they can bounce.
Unless something changes, it’s starting to look as though the month of June will bring some volatility to the market.
