I cannot recall another time that the market has had as many sideways sessions as we've seen of late. Of course, I also cannot recall another bull market with so many dull days that have so little volume. When it comes to this issue, I keep thinking of that old Wendy's slogan: "Where's the beef?" If all that chatter about inflows is to be believed, why is volume so low?
On a statistical level, there isn't much to say about Monday's action. With breadth in the red, the McClellan Summation Index is failing to head higher. It is also rather curious that the Oscillators are not budging, either, milling about at the zero line. The way the math works out, they are more apt to trend lower over the next week or so.
The 30-day moving average of the advance-decline line is also more apt to head down over the next several weeks.
However, the put-call ratio of the ETFs was what caught my eye -- its reading was incredibly high, well above 200%. We saw a similarly lofty number last Tuesday, so now we've seen two such readings in the course of a week. Similar occurrences took place in October and April of 2011, both times near highs in the market. There was also a duo of high readings in May 2010, the month of the Flash Crash, although these readings came after the crash. Keep in mind that the market continued to trend lower into late August that year. Those are the bearish comparisons.
Since there is always a "but," let's note the fall of 2010 saw were two such instances, once in September and once in December -- and neither near a high. In fact, there was a relentless rise during that period. Even more interesting is that the fall of 2010, and into the spring of 2011, saw the Investors Intelligence readings get above 50% and stay there for months on end.
So if you would like to view these statistics as bullish, 2010 is your template. What's even more interesting here is that stocks rallied nonstop that year, from late August to early November -- and then, all of a sudden, we saw a 4% correction in the course of three weeks. Then stocks started to climb once again, relentlessly, for about another two and a half months.
At the current juncture, the market has made a low in mid-November, so we're just about at that two-and-a-half-month point. The 2010 comparison is interesting -- unless, of course, you think corrections have been outlawed. I'd like to believe they haven't been.
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