Tuesday's Winner Was the Either/Or Market
Although there was some panic this morning, stocks reversed to close over S&P 500 6800 again. But the either/or market remains intact.
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Ding ding ding! 6800 (on the S&P) broke like it meant it. It also snapped back to close just over it.
But in the meantime, when it did break, we saw 91% of the volume on the downside (it closed at 77%), so we finally got a little bit of panic in the morning.
The QQQs saw volume trade just over 90 million shares. That is not extreme (it was over 100 million in November), but it is now the second time in three days the QQQ volume has been over 90 million shares, so folks were—at least in the morning—piling out of tech/QQQs.
If you are wondering how I know that it wasn’t afternoon volume, that’s because two hours into the trading day, the QQQs had traded just over 50 million shares already. So the four and one-half hours after that was 40 million shares, which I would not consider panicky. What’s that, ten million shares an hour at most?
Finally, the number of stocks making new lows on Nasdaq was 292. That means we saw far fewer stocks making new lows than we did on February 5th when Nasdaq had 569 new lows.
Even though we did see the market close well off the lows, very few noted that this was the lowest closing price for Nasdaq since November. Oh, I know it’s hard to see on the chart, but the close was a bit lower than those two low days in February. On an intraday basis, we saw Nasdaq come very close to its 200-day moving average line as well.
I still think we’re in an Either/Or Market. Now that software (everyone loves software again!) is holding and in some cases rallying, it might no longer be the most hated group, but at least it is doing what it ought to do, which is trying to grope for a bottom.
Speaking of the Either/Or Market, the 493 did not fare so well on Tuesday. The breadth was the worst it has been since January 20th. This has caused the McClellan Summation Index to roll over. It will now take a net differential of +1800 advancers minus decliners on the NYSE to halt the decline. So just as everyone got comfortable with all those hot groups because they didn’t go down, now they have. And I expect it is not over, even if they rally tomorrow or the next day.
The Overbought/Oversold Oscillator is finally back under the zero line, but it is not oversold. I have no estimate for when it might get that way. We don’t need to collapse every day as we did on Tuesday, but this group was due for a correction, and they will likely have to work through that correction now.
The Either/Or Market remains undefeated.
