Skip to main content

OK, This Party's Getting a Little Better…

But not a lot – the small caps made a rally and we have some positives to cheer – but those those new lows … they don’t look good.

The Market

Since I have been the Queen of Complaints in the last week or so, I am going to begin this evening with a positive.

The put/call ratio was over 100% for the first time in a week. So that tells me that two days of stalling out and folks are getting nervous. The problem is that we need to see several more readings like that to get the moving average of this indicator to the top of the page. But at least for one day the complacency evaporated.

Sticking with sentiment, the Investor’s Intelligence bulls shocked me by ticking down this week. I thought they might just eke out a reading over 60%, but instead they came down to 57.2% from 57.8%. So it’s still over 55%, which says complacency, but not over 60%, which says euphoria.

Image placeholder title

Also, with the breadth having been red for seven of the last 10 trading days, small caps are a little bit oversold.

How’s that for positives?

Now on to the other indicators. Despite the rally in small caps Tuesday, breadth was negative. That means the McClellan Summation Index continues on its downward path. The chart is shown below. But know that it now needs a net differential of positive 1,100 advancers minus decliners to halt the decline. That’s quite a bit when you consider we are at all-time highs.

The new lows continue to rise. The biggest change is that the New York Stock Exchange has started to play catch up to the NYSE, trying its best to get to a triple digit reading. Tuesday the NYSE had 97 new lows. This is simply not what happens in a healthy market, the new highs should be well over 300 by now instead of 120, and new lows should be in single digits. OK, I’ll allow that this time of the year that new lows could be higher – but under 50 not near 100.

Image placeholder title

Finally, the Daily Sentiment Index for the Volatility Index is now at 8. It can go lower, but generally speaking, when it gets to single digits it’s time for us to look for it to go the other way.

I would say I think that the longer we mill around at the highs the more bearish folks will get. Why? Because even if you don’t look at the indicators you can see that individual stocks are leaking. It’s been going on for two weeks now, so it’s not like no one has noticed it.

New Ideas

Notice how the ratio of the Philadelphia Semiconductor Index (SOX:Nasdaq) to Nasdaq topped out on Nov. 5 and has been heading down ever since. Now it’s coming down from a higher high, so it’s not awful, but let’s keep an eye on this because the SOX has been a leader.

Image placeholder title

For those who keep asking about Pan American Silver (PAAS:Nasdaq), it barely missed staying green for the tenth straight day Tuesday. A pullback toward $17.50 would have my interest to get long again.

Image placeholder title

Today’s Indicator

The chart for the McClellan Summation Index is below:

Image placeholder title

Q&A/Reader’s Feedback

Helene welcomes your questions about Top Stocks and her charting strategy and techniques. Please send an email directly to Helene with your questions. However, please remember that TheStreet.com Top Stocks is not intended to provide personalized investment advice. Email Helene here.

The problem with liking iShares MSCI Europe Financials (EUFN:Nasdaq), an exchange-traded fund for financials in Europe right now is that it has gone nowhere for almost a month and is doing so right under resistance. So either you wait for it to breakout over $19 or wait for a pullback at or near the blue line. But to make a decision right here and now seems like a coin toss to me.

Image placeholder title

When we looked at Goldman Sachs (GS) - Get Free Report recently, I said it could rally to the top of the range and it has. The question I was asked, however, is if it can rally up and over. I think it can rally again, but as you can see from the left side of the chart, it has a lot of resistance all the way up. So, while it might seem like a breakout, it might be more like a trudge through deep snow to make significant progress.

Image placeholder title

Las Vegas Sands (LVS) - Get Free Report is interesting to me, because as it comes down toward that $60 area, it looks better to me, and buyable. Stocks that pull back gently to retest are better than stocks that just keep on going.

Image placeholder title
Dow is the Most Vulnerable to Profit Taking

Dow is the Most Vulnerable to Profit Taking

Despite the newfound focus on the Dow Jones Industrial Average last week, it turns out we may be seeing the last gasp of outperformance here.

How Hungry Is This Market?

How Hungry Is This Market?

Here's what I'd like to see happen with this rally -- I'd like it to show some FAANGs. Here's why -- and a look at Microsoft's chart, news highs and more.

Sloppy With a Chance of Rallying

Sloppy With a Chance of Rallying

Here's why I see another rally before the weekend, even amid the messiness, and a bump for Amazon.

Sloppy With a Chance of Rallying

We Can Rally Just a Bit More

Energy stocks have a lot of complacency in them.