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Today, We Saw a Shift in Sentiment

We'll take the market positives where we can find them.

The Market

Today had two minor positives.

The first arrived early in the morning when the number of stocks making new lows did not expand beyond what we've seen recently. They still might, but for now the peak reading for the NYSE arrived on Oct. 25 when there were 111 new lows, and today there were 72.

Nasdaq, where the action in new lows has been worse, saw 93 new lows vs. yesterday's reading of 95 (this is revised from the preliminary 101 new lows I noted last night). Two issues aren't a major victory, but at least there was no expansion today.

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The other positive was that the put/call ratio surged to 110%. The put/call ratio for ETFs scooted up over 200%, the highest reading since 310% in mid-October. It didn't help the Russell 2000 then, but a week later the S&P 500 had tacked on 15 points.

Prior to that, we have to go back to April to see a put/call ratio for ETFs over 200%. In fact, from Jan. 1 to mid-April there were five such instances, and since that mid-October reading, we haven't seen another. So whether it matters or not in the near term, what it tells us is there was a sentiment shift today, one we haven't seen in quite some time.

As for the High-Yield Bond ETF (JNK) - Get Free Report, you can see it is sitting at the line I drew in yesterday. As I said then, I think it has a bounce attempt off this line. If it breaks it with any oomph, that would be quite a negative for the market, in my view.

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Finally, the ratio of the Russell 2000 ETF (IWM) - Get Free Report to the Nasdaq 100 ETF (QQQ:Nasdaq) ticked up today. You should try to find a magnifying glass to see it, though, since it was not exactly robust. I am still hopeful we see this chart start to bottom.

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All in all, it was another day where the S&P 500 was lower and spent the day clawing its way back. It has done this four such times in the last three or four weeks. I want to see the breadth improve.

New Ideas

I have liked the long-term chart of Twilio (TWLO:Nasdaq) for quite some time, and today it died and proved me wrong. I had thought that decline in late September was the left shoulder of a head-and-shoulders bottom, but clearly I was wrong. Sure, it's possible this week's action is the left shoulder, but my guess is it gets stuck at $28 now.

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Today's Indicator

The 10-day moving average of the put/call ratio is rising, which is bearish for stocks.

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Q&A

The best news for Citibank (C) - Get Free Report is that there was no lower low today. The bad news is that it has a lower high. I suspect at some point it attempts to tag that uptrend line. Sideways action over a few months would be OK. It spent two months moving sideways this summer before the recent run. Break that uptrend line and I will change my view.

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The iShares Nasdaq Biotechnology ETF (IBB:Nasdaq) is finally approaching that support at $305 that I tagged a few weeks ago. I think it tries to hold and rally from there. My fear is that the rally will only form the right shoulder of a head-and-shoulders top, but for now a rally off that level is my best guess.

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I don't know what to do with Lululemon Athletica (LULU:Nasdaq) because when I first liked it months ago, the target was in the $62-$63 area. It has done quite well consolidating and not falling apart, so I'd say through this $64 area and the next target is near $70.

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