The Stock Market's Current Phase Is Catlike
Sometimes the market rips higher. Sometimes, it crawls. Lately, it's crawling.
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I have described the last week in the market as creeping and crawling upward.
In my house, we have a staircase that is 16 steps. My cat, Rosie, loves to run up the steps. But somehow, she seems to only love the first 13-14 steps because she flies up to that point and then stops, contemplates, and then very slowly climbs the last few steps, making sure all four paws rest on each of those last steps before she attempts the next one.
When I see her do this, I half expect she will get to the top and plop down right there, exhausted. But instead, she then typically does what cats do: finds a good place for a nap.
When I look at the chart of the S&P or even the QQQs, I see Rosie climbing the stairs, literally dragging herself up those last few steps. C’mon, I know you know what I mean!
I would love to report that Friday changed the indicators, but not much. Heck, the Daily Sentiment Indicator (DSI) stayed the same, so even that acts like Rosie at the top of the stairs! The only number that changed was the DSI for the VIX slipped to 14.
I suppose there were some minor changes. First, the equity put/call ratio chimed in at .72, which is the highest reading since June. Maybe folks are just hedging up the earnings this coming week from the mega cap tech stocks, but that’s a small change (and has managed to turn the ten-day moving average of the equity put/call ratio up)
Then there is a bigger oddity. Each weekend I do a poll on Twitter, asking the next 100 points for the S&P. I began this exercise in March of 2020 when the daily moves during Covid were so extreme (and the S&P was much lower). For the majority of the last five years, my respondents have mostly gotten it right; they are not to be faded.
Yet since May 2nd, the majority has only chosen UP only twice. That’s it. Two weeks out of more than ten weeks since then. Two weeks while the S&P has tacked on nearly one thousand points.
Of the two times they have chosen up, one week was up and one was down, so aside from the fact that it is only a sample of two, it is a coin toss. What intrigues me about this is that this week they voted up. Are they capitulating? It certainly has been contrary to fade them. Oh, and that time they voted up and were wrong? That was the last time the S&P saw a greater than one percent down day.
The one thing I expect from the coming week is that volatility will pick up. Maybe that’s just stating the obvious, but with the DSI for the VIX at 14 and the news flow coming our way, it seems like a decent bet.
