There will be those who praise today’s move, but I prefer days like yesterday.
Sure, the market was up today vs. yesterday, but yesterday we were able to see in which stocks the selling was drying up. All we got to do today was witness the places there was ho-hum buying interest.
For example, yesterday the Transports just dribbled down, which is good. The selling is drying up. But today the buying interest was minimal, so I’d rather we see stocks get truly sold out than this chop-fest we seem to be mired in.
Or what about the banks? I know I have harped about the banks quite a bit lately, because they are not going down when interest rates go down (and bonds go up). I think that is a divergence, that banks are ignoring bonds now. Remember how in May tech stocks were ignoring bonds when they went down (and rates went up)? I think we are closer to the lows in interest rates than the highs.
How can you celebrate the S&P and Nasdaq making new highs when fewer than 200 stocks on either exchange are making new highs? Not to mention that new lows on the New York Stock Exchange crept up to 63. New lows should be contracting on up days.
On the sentiment front, we’re all over the map. The American Association of Individual Investors bears jumped up to their highest level since late January, although I would point out they were actually correct, because February saw a peak in growth stocks. But in general, this would go into the positive column, confirming my weekend Twitter poll.
Then there is the National Association of Active Investment Managers Exposure Index, which jumped to 97, the highest reading since mid-June. I would much prefer to see this at least back under 80, or heck, back at 44, where it was in May, but now it is kissing 100.
Finally we have the DSI for Nasdaq at 92 tonight. It’s hard for me to get excited about Nasdaq when the DSI is over 90. The S&P 500 has a bit more room since it is at 81. The volatility index is at 14. So, maybe tomorrow’s employment report shakes things up. I see some improvement here and there but mostly there’s a lot of grinding going on.
We have looked at SPDR S&P Biotech exchange-traded fund (XBI) - Get Free Report a number of times lately with an eye that if it could hold those lows it might improve, so I want to follow up by noting how much it has lifted off those lows. There is minor resistance here at $130, but this now looks like a bottom in the making, although it will take a lot more work to get to a breakout (over $140).
The 10-day moving average of the equity put/call ratio can also go in the “sentiment all over the map” category. On the whole it is bullish for the market since it is at the high of the pattern, but notice how that doesn’t typically occur when stocks are up at the highs, it tends to occur when they have backed off some.
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There is not enough price action on the chart of Clear Secure (YOU) to make an educated guess but I would say if it pulls back to that $47-$48 area it would be buyable.