Just When They Stop Talking About Broadening Out, We Broaden Out
Thursday was one of the starkest examples of the Either/Or Market. How else can you explain the S&P down nearly a hundred points and not only was breadth positive on the day, but upside volume on the NYSE was also 52%. And the Russell 2000 notched its fourth straight up day, which is the longest streak since mid-August (which you might recall was when the ‘others’ began their long slow decline into late September).
To illustrate this even further, Nasdaq which lost 2.6% on the day had a mere 56% of the volume on the downside. That’s it, folks, not much downside volume. That means there was no panic, just a lot of selling and the selling was concentrated in the Mags and SOX, what I used to refer to as the Index Movers.
That also means that the number of stocks making new lows on Nasdaq has still not exceeded that 700 number from last week.
But you know what else? The number of stocks making new highs on the NYSE exceeded 100 for the first time in more than two months. Just as everyone stopped talking about the broadening out, you know what happened? We broadened out.
But it seems folks don’t love the broadening out as much as they liked it in early August. I saw more people complain about the move in Proctor and Gamble than embrace it. Sure, the chart gapped up to the old highs, but they just hate when Beloved Tech is not the leader.
I saw one guy on television say it’s not good to have a market that is led by stocks that are not tech. Have folks forgotten that we had an entire bull market from 2003 to 2007 that was not led by tech? Have they forgotten that off the 2009 low, tech stocks were run of the mill and it wasn’t until after 2010 (or later) that tech became the only game in town?
Oh, I know, it’s that the p/e’s of the others aren’t low. But I am just a lowly chart reader, so I don’t concern myself with that. If a stock is going up and I am making money on it, do I care if the rally is based on short covering or real buying? I do not.
In any event, what we did not get was a major change in sentiment. As long as we have the Either/Or Market there is a place to run and hide so folks don’t get panicky. They simply get grumpy about their tech stocks.
I have thought the tech stocks should rally this week and thus far that has been the wrong call. Yet look at the Overbought/Oversold Oscillator for Nasdaq: Thursday’s action did not budge it. That’s because it remains oversold.
While there has not been any panic selling, the QQQs did see another day with 60 million shares traded on the downside. That’s the second one in a week. Maybe there will be panic if we break the neckline of the head and shoulders top on the QQQs.
