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The Market's Trying Our Patience

It's hard to say this market's all blue skies when we're getting clouded by new lows and breadth is dripping.

The Market

I want to love the market here the way everyone else does. I want to be able to tell you I see nothing but clear skies ahead. But it is hard for me to do so.

It’s hard because Nasdaq, even at its highs, now has more stocks making new lows than highs for the second time this week. In fact, with 126 new lows today, it is the most since the 132 we saw on Oct. 8. Nasdaq was 600 points lower back then.

What’s more: We saw a mere 106 new highs. On Nov. 4, we saw 248 new highs. What has happened to them?

And lest you think it is only Nasdaq, the New York Stock Exchange had 69 new lows with 74 new highs. That’s a net differential of five. It is not easy to make money on the long side when your chances of picking a loser is just as easy or easier than picking a winner.

Breadth has now been negative for six of the last seven trading days. The bad news is that in this same time span the S&P 500 has rallied about 13 points. The good news is that at least all that negative breadth is pushing the market back toward oversold.

The McClellan Summation Index now needs a net differential of positive 1,400 advancers minus decliners to stop the current decline. A week ago it needed positive 200.

And remember last week when everyone said we had a “Dow Theory Buy Signal”? The Transports are down nearly 4% since then. No one seems to care.

And the banks? I noted a week ago they needed a rest, especially with the bonds getting oversold. No one even mentions that the Bank Index is now off 2% from a week ago. In other words, there is weakness underneath. I get that the indexes are grinding higher. I get that there are stocks that are grinding upward. But a week ago, there was no selling in individual stocks and now there is.

The best news is that the put/call ratio rose today to 100%. This is the first triple digit reading since Oct. 31, so folks are finally pulling in their horns. I maintain that a whoosh to the downside will see folks get bearish in a hurry and a breakout for the Russell 2000 – which now looks less likely in the near term -- would get them to giddy.

I have professed patience. And I know that is so hard for most of us.

New Ideas

My old friend Kellogg (K) - Get Free Report refuses to break out. It just mills around up here. But if it can ever get up and over $65, it should be nice. I’ll admit my patience is wearing thin, here.

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Today’s Indicator

The Volume Indicator is back to overbought. The reading is now 55%.

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Q&A/Reader’s Feedback

Kraft Heinz (KHC:Nasdaq) has a nice base it has been working on for the last nine months. As long as it stays over around the $32 area, it has a good chance at filling that gap up near $40.

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I was asked how far I think McDonald’s (MCD) - Get Free Report can rally, and I have my eye on that $197-$198 area. Quite frankly, if it can get through there, it has a funny little head- and-shoulders bottom — it’s tiny — so if it can get over that $198 area, it could fill that gap near $207.

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I think it was mid-October when we last looked at Pan American Silver (PAAS:Nasdaq), and it has done remarkably well considering silver has done so poorly. It broke out Tuesday and while it is likely going to move in fits and starts the next target should be that old high near $19.50.

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High on Tech

High on Tech

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Bond Relief

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