I saw some interesting statistics in Wednesday's trading, including several metrics that surprised me.
One of these was the number of stocks making new highs, which chimed in at 444 on the NYSE -- far more than what I had expected. Back in September there were 495 new highs, and the market is now just about 5 points away from the September high, so that is a statistic to watch closely. Should we see any move above the September high that's not accompanied by more than 495 new highs, that would constitute a negative divergence.
Another surprise was that the NYSE saw 90% of its volume on the upside for two trading days in a row, yet the Nasdaq -- which rose nearly 100 points -- didn't see cumulative volume keep pace. On both days, the upside volume fell just shy of 90% for that index.
Then there was Wednesday's put-call ratio. Even amid the seeming total euphoria exhibited in the media, it came in at 97% -- quite high for such a big up day. Yet the ISE's equity call-put ratio, which typically broaches 200% when the put-call ratio sinks, chimed in above that level for two sessions in a row. In any event, neither of these indicators saw a change in their moving averages, especially as it concerns the put-call: Both are still moving upward.
Considering the market rally for the past two days -- and considering that, without Wednesday's last-hour push higher, the indices would have sat there all day following the gap-up open -- I expect some pulling back or chopping about for Thursday.
With the cold weather upon us, I was asked once again to review the charts of oil and natural gas.
Oil has tried my patience of late, but it finally did rise above $90 per barrel, and it's now getting close to resistance. My target had been near $95, and I still expect it will get up there, but I do not expect it to get through. Rather, I expect it to climb to that level and then correct, perhaps all the way back to the $90-to-$91 area (drawn in red).
Nat gas is another story, as it broke badly in Wednesday's trading. Typically a move like this demands that we watch it for a few days following; in this case, I give natty a few sessions to recapture $3.40 per MMBtu, the level from which it broke. Failure to do so would set up a downside target near $2.70. One reason I am willing to give it a chance to recapture $3.40 is that the double-top measured to $3.20, so it's possible this was a false breakdown.