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A Market of Mixed Messages

Breadth wasn't bad, but net volume was.

The Market

Wednesday was a market of mixed messages.

Breadth was barely red (-250), but some might say that's because the slamdown came so late in the day. But let's not rationalize -- breadth wasn't bad.

The flipside of that is that stocks that were down got all off the volume. The net volume (up volume minus down volume) was -1.6 billion shares. By contrast, Tuesday's net volume was only -1.3 billion shares.

This divergence caused the TRIN to close the day at 2.15, which is high. Remember, a high TRIN means there was lots of selling -- and a lot of selling is good, because that means we're cleaning out the weak hands.

But let's look at the McClellan Summation Index:

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It will now take a net differential in the advance/decline line of -100 (basically, a flat to down day) to turn this back downward. That's been a problem since the market hit its recent lows, and it remains one now. It's also another reason (as if we needed any more) to believe that we'll see a retest.

On the sentiment side of things, the total put/call ratio hit 106% on Wednesday, which is bullish. But the equity put/call ratio was 58%, which isn't bullish and has done what we thought it would do, which is pull the 10-day moving average down even more:

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However, the biggest challenge in Wednesday's market was the bonds. I really thought that the bonds should rally, but they collapsed instead. The top in the iShares Barclays 20+ Year Treasury Bond ETF (TLT:Nasdaq) measures to $115, but I thought we'd get a rally first. I am clearly dead wrong. Yet the Utes are still well off their lows, so I'm not convinced that rates will keep going up. But for now, I'm wrong:

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New Ideas

Did you see the way the SPDR Barclays Capital High Yield Bond ETF (JNK) - Get Free Report had that snapback rally? That's what I thought we'd see in TLT. Be that as it may, if this chart can't rally from that gap-fill around $35.90, then it appears the retest will arrive faster than I anticipated:

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Today's Indicator

The S&P 500 Volume Indicator is at 50%, which is neither overbought nor oversold:

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Q&A/Reader's Feedback

Google parent Alphabet (GOOGL:Nasdaq) is facing resistance here, but it should attempt to fill the gap (having come so close before). The stock might just decide to ride the underside of the line, but a stall-out for a few days might help. If Alphabet fails to fill the gap, I would consider that to be a negative:

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Apple (AAPL:Nasdaq) was the only stock I was willing to buy at the lows along with the indices, but I also thought $167-$168 would cap it off. I was wrong -- there was pretty strong resistance there, but AAPL blew right through it. The next resistance level is the stock's old highs. If Apple starts back down from here, then $167-$168 would be a good place to buy, as that would fill a gap and retest the former resistance (which is now support):

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Applied Materials (AMAT:Nasdaq) has a lot of resistance here between the downtrend line at $58 (marked in black below) and the flat resistance line at $59 (denoted in red). AMAT also appears to have been in the green for eight straight days. All of that makes it hard for me to get excited about the stock right here. However, I'll be encouraged if Applied Materials consolidates, then makes a move upwards through resistance. By contrast, I think any move up and over the red line without a consolidation would exhaust itself quickly. I'd wait:

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What to Watch as We're Overbought

What to Watch as We're Overbought

Let's take stock of the indicators and see what's ahead -- also a look at Cleveland-Cliffs, Southwest and several ETFs.

Rounding Up the Herd

Rounding Up the Herd

We're seeing a turn toward bullishness. Now let's see what happens when the consumer price index lands.

A Win-Win-Win for the Nasdaq

A Win-Win-Win for the Nasdaq

The exchange is working on a winning streak, so let's see if we get a pattern-changing trend. Also, let's check gold, the overbought forecast and Under Armour.

A Win-Win-Win for the Nasdaq

Believe in the Resistance

We learned a few things from Monday's action -- one of them is that resistance still matters. Let's check the market internals, breadth, and ... silver.