Treasury Bonds Were Downgraded, and It Seems as Though Nobody Really Cares
The stock market, however, appears set to march higher. Will it?
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There was no real selling from the debt downgrade. Heck, the S&P had a low on the day at 5895. Friday’s low was 5907. Not much
But there was a minor change. Keep this in mind: the S&P has now had six straight green days. None of the other major indexes have enjoyed that. My general rule of thumb on a winning (or losing) streak is that the longer they go, the more vulnerable they get. Also, folks tend to get less bullish the longer rally streaks go on (thinking they will end), just as they get less bearish the longer downside streaks go on (thinking they will end).
So can the S&P last until the end of the week without a down day? I’d bet it can’t.
Yet that’s not what I am focused on. The new item I have on my watchlist is that the penny stock buyers are back. Recall, I don’t mind if folks want to speculate like that, but I do not want them to do it at the expense of ‘regular stocks’. The NYSE had its lowest volume since January 29th, while Nasdaq had record volume. Nasdaq’s record volume was thanks to three stocks accounting for three billion of the 13 billion shares that traded Monday.
Breadth was actually okay in that net breadth on the NYSE was -325. The McClellan Summation Index is still rising. It now requires a net differential of -1700 advancers minus decliners on the NYSE to halt the rise. That remains a decent cushion, meaning we can have a few days of negative breadth and the indicator can still rise. Once that number gets under -1000, I consider the cushion to be small because one harsh down day can change the indicator’s direction.
The number of stocks making new lows did not expand, so there is nothing to report on that front. The NYSE’s Hi-Lo Indicator moved up a half a point. When I was a kid and I lollygagged and dragged my feet to keep up with my mother, she used to say I was walking like molasses moving up the hill sideways. That’s how I would characterize the NYSE Hi-Lo Indicator.
Nasdaq, though, crept upward a tiny bit more but is still at a lower high. I have expanded the chart so you can see the action better. I still think this ought to push upward a bit more before the end of the week. My only question is if it can make a higher high.
Finally, my estimation is that the Oscillator has a chance tomorrow to lift (blue line), but it now appears that it will make a lower high, which would be the first time it has done so for this rally.
We’ll continue to watch to see if there is any discernible change in the indicators between now and the end of the week.
