I'd love to tell you that today's rally changed a host of indicators, but it didn't. In general, the day felt more like new money came in for the quarter and therefore the rally was very concentrated in the indexes. I’m not even sure it changed sentiment all that much.
There are, however, a few indicators that are worth noting. First, we already know that the number of stocks making new lows has been contracting. It has been enough that the Nasdaq's 10-day moving average has peaked.
The prior two (big) peaks on the chart came at the January low and again at the May low. The March and June lows arrived at the lower highs in the indicator.
Then there are the number of stocks making new highs on the Nasdaq. I grant you there are a lot of SPACs in there (and long-time readers know I am not a SPAC fan!) but 57 new highs is the same number we achieved on September 12 when the Nasdaq was trading 1,500 points higher.
Then there is the McClellan Summation Index. It is still heading down. It only needs a net differential of +700 advancers minus decliners to halt the decline. That is the closest we have come since the market turned down two months ago.
Sentiment-wise not much changed but I have discussed the ISE Call/Put ratio a few times in recent days because the equity reading went under 1.0, which is rare, and then it did it for a second day (generally bullish for stocks). Now we have another situation where the equity ratio is lower than the total. That is extremely rare. In fact, it has only occurred once since the March 2020 lows. But if I look back longer term I can report that in the past it has been a positive for the market overall.
However, to me the biggest change in sentiment that I can see is toward the bonds. What a difference a few days make. Recall a week ago the DSI for bonds got to 7. Everyone wanted to buy T-Bills, even my mother! Today I have seen a lot of calls, even some by influential investors, that say, OK, enough on bonds, rates are done going up. The DSI is back to 21 for bonds. You can see my view on the TLT chart below.
I don’t have a strong view as to whether or not we rally Tuesday but I do think we should rally again. We’re not overbought yet and some of the intermediate-term indicators are not yet overbought either.
I still don’t have charts that look great. Therefore I will follow up on Zscaler (ZS:Nasdaq), which I was asked about last week. ZS filled the gap and bounced off the line so as long as that line is not broken, the stock should try for that $180 area, maybe even $190.
The 30-day moving average of the advance/decline line is still oversold.
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Arrival (ARVL:Nasdaq) has not had a bounce in two months so sure it ought to bounce but the stock is now under a buck so I’m a seller into any lift.
Newmont Mining (NEM) - Get Free Report has a base that is too small to fuss over. I suspect $45- 46 will be a tough spot on the first leg up. However, the fact that the DSI on gold got to 7 a few weeks ago tells me that if the stock gets to $45-46 and then pulls back to $42-ish and holds it could improve. For now that mid-to-upper $40s is a bit of resistance.
iShares 20+ Year Treasury Bond ETF (TLT: Nasdaq) finally bounced, and quite a bit since last Monday. There is an awful lot of resistance in the $107-108 area so I expect that to be a trouble spot on any rally.