No, the Market Still Has Not Broadened Out. It's a Stock Picker's Market.
People keep waiting for the rank and file stocks to get in gear, but unless you've got AI in your name, it's not happening.
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Remember all that talk about the market broadening out? I would like to report it did not broaden out the last two days. But overall, as I have said, breadth is making higher highs, generally, even if the McClellan Summation Index can’t get out of its own way.
I would also like to report that the QQQs have now been green for nine straight days. Oh, I can probably find some statistic that says this, that, or the other thing about what happens when we have a long winning streak like that, but I’d rather tell you it hasn’t gone more than that since early 2021, which was a peak in many of the speculative names.
I think the market is in a different place now vs then, but I do find it interesting that such a streak last occurred almost five years ago.
With that in mind, it’s even more curious that the Nasdaq Overbought/Oversold Oscillator is nowhere near overbought. I expect it will get short-term overbought by Thursday, especially if the market is green on Tuesday. That’s the math.
If you are wondering why the Oscillator is still sitting just over the zero line, that is because this Oscillator is based on breadth, and while breadth has kept pace, it hasn’t been spectacular.
Let me also report that the Daily Sentiment Index (DSI) for Nasdaq is now at 84. So here, too, we see that if we get another green day, this ought to scoot right over 85. That would mean if Nasdaq is up on Tuesday, we have a ten-day winning streak and a DSI over 85; generally speaking, that is a ripe time for a pullback.
Last week, I highlighted some of the restaurant charts that are not acting well. On Monday, McDonald’s broke an uptrend line that has been in place for a few months.
But we also saw quite a lot of selling in some of the staples. For example, Colgate CL made a new low.
Kimberly Clark KMB did not match Colgate with a new low, although it is trying to fill a gap and test that late July low.
Maybe, just maybe, folks should stop saying the market will broaden out and call it what it is: a stock pickers market. The problem is that these days folks seem to only be picking AI stocks and gold!
Speaking of Gold, GLD got very close to that 340 target I have on it, but the DSI is down at 82. Both together (hitting a target and a high DSI) is a reason to take action. One of the other is a coin toss.
