Not much changed in Monday's slow session.
Breadth was still good, and volume was still low. The number of stocks at new highs remained lethargic, although there was a minor uptick from last week. The banks outperformed, the dollar didn't rally and the 10-day moving average of the equity put-call ratio is still trying to turn upward. So, among all the choppiness, today I will offer something for both sides of the aisle -- the bulls and the bears.
If you are bullish, then you might glom onto that old adage about never shorting a dull market. You might like the fact that there is very little selling when the market does go down, or that the McClellan Summation Index has made a higher high than it did in late November. The bears, however, will like that it is still lower than it was in late October.
For those of you wondering what it will take for this indicator to roll over, it's not much -- one harsh down day would do it. Still, keep in mind that it's a matter of whether the indicator rolls over from a lower high with the S&P 500 at a higher high. For now, it's at a lower high than that of October, but the S&P has yet to get over that October hump as well. Give this one to the bulls for now.
I also want to update you on the 30-day moving average of the advance-decline line, which I've discussed several times recently. As you can see, the blue line currently has a bit more room before it will push up into serious overbought territory. For the bulls' sake, the chart below goes back to the fall of 2010, when the market got overbought and it didn't matter. Keep in mind that, back then, the Fed was hard at work on its quantitative easing plan. Either way, this indicator should back off some later this week and next week, and then "rally" again.
Thus far the oscillator looks more as it did during the November market high than it did for the December high. By that I mean it is stepping back and working off the short-term overbought condition.
The 10-day moving average of the equity put-call ratio continues to appear as though it is dying to curl upward. Lately that, too, has heralded a market correction of some sort.
I don't get the sense the market is full of excitement and giddiness -- just that it is perhaps a bit complacent. I believe we saw that type of sentiment in some of the high-flying momentum stocks Monday. A month ago that sort of action would have turned the market significantly lower and had everyone fussing over it. Now, it forces a choppy day. That's why I say I'm seeing a bit of complacency.
There is still no change, in my view. I believe stocks will likely back off some, and then rally again.