More Stocks Are Hitting New Lows. The Market Doesn’t Seem to Care.
One thing we did not hear on Monday: no one was touting the broadening out trade. I guess that’s tough to do when RSP has just enjoyed three straight days of red. And it made a two-week low.
Notice how breadth—the cumulative advance/decline line is right back to where it was in those final days of July. Now there is no lower low yet (breadth would have to trade under that mid July low), but this is the picture that says ‘not so broad’.
Yet the selling dried up not long after the open, the same thing we see almost every day. It doesn’t accelerate; it does not expand. Yet statistically, we see that the number of stocks making new lows on the NYSE topped 100 again, with the reading at 137, the most since August 18th.
Nasdaq too saw an increase in stocks making new lows, with just a bit over 200 new lows. But over on Nasdaq, there was buying in the tech/semis. It has been my call that the others would/should see selling in August, and for two weeks, the market mocked me, screamed at me, that I was wrong.
But back to Nasdaq, despite all those new lows (210, the most since July 31st, up/down volume was flat as can be. Yes, there was 50% up and 50% down. That is how much the buying in tech offsets everything else. Or one might say, the selling drying up not long after the open.
Could the lack of selling have been because it was the end of the month? Sure. But that would be rationalizing an indicator. What it might have been is that we came into the week short-term oversold. Mind you, it’s not a great oversold, but we were a little bit oversold. Recall the Nasdaq Momentum Indicator that we looked at last week. It ticked up on Monday.
My own Overbought/Oversold Oscillator ticked up as well. Again, it is the math of having come into the week oversold.
The bottom line is the statistics were poor, but there was little change in the indicators.
And what of bonds which refuse to rally? Well, the Daily Sentiment Indicator (DSI) is now at 14, so maybe we’ll finally get that ‘rate of change’ move that will scare everyone, not just the bond folks but the stock folks too.
The one thing I can tell you is that the sentiment did not seem to be concerned or scared at all. Not just the chatter, but the options ratios showed very little concern. Heck, it was an Either/Or Market, so why should they?
