Off With a Bang, Out With a Whimper

 | Jan 10, 2013 | 7:16 AM EST  | Comments
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I was hoping for something a bit more in the way of fireworks-type rally Wednesday -- and it did begin as though it would really get going, with everyone all fired up -- but then the rally simply died. However, it didn't do so with any "oomph." Rather, it just petered out. Yet, curiously, the index put-call ratio slipped right back under 100%.

While that metric is not the negative it had once been, we have now seen sub-100% readings in three out of the last four sessions. When this gets persistently low, we know the market is due for a pullback.

As far as statistics are concerned, it was an interesting day. If we looked at breadth via the advance-decline line, we would have thought trading was fabulous, with a ratio of 2 to 1 in advancers vs. decliners. Yet when we do the same exercise using up and down volume, that turns in an essentially flat reading.

In any event, you can see the Oscillator is finally heading into overbought territory, and this should peak sometime early next week.

Overbought/Oversold Oscillator -- NYSE

The 30-day moving average of the advance-decline line, meanwhile, already peaked late last week.

30-Day Moving Average of the Advance-Decline Line

Also, a few days ago the Volume Indicator peaked at just over 55%, which indicates an overbought condition.

Volume Indicator

The 21-day moving average of the ISE call-put ratio has turned down, as well.

ISE Call-Put Ratio -- 21-Day Moving Average

As noted in Wednesday's column, the equity put-call ratio's 30-day and 10-day moving averages are now attempting to turn upward.

The Hi-Lo Indicator has not yet peaked, but it is now up in overbought territory. The absolute number of stocks making new highs has been dwindling, and I continue to expect any higher high in the S&P 500 to carry a negative divergence, given that we continue to see less than 495 new highs -- the peak reading in September.

Hi-Lo Indicator

The McClellan Summation Index continues to rise, and that is bullish. It would take at least one and more likely two harsh down days in order for it to halt its current rise. What should be concerning is if this indicator makes a lower high. As you can see, it is still well off the highs made in September.

McClellan Summation Index


 

Overbought/Oversold Oscillator -- Nasdaq

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