Dull as Dishwater

 | Feb 13, 2013 | 6:30 AM EST  | Comments
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HYG

Despite the market's total sideways movement Tuesday, a few interesting developments cropped up.

For instance, as everyone knows, the KBW Bank Index (BKX) was one of the hot areas of the market. The BKX-to-S&P 500 ratio ticked up, and while it didn't reach a higher high, it remains in the green. Please do keep in mind that the BKX itself has a measured target near the 56-to-57 area, so it ought to run into some trouble up there.

BKX vs. S&P 500

On the flip side, with breadth quite good, I find it surprising that the McClellan Summation Index -- which is based on breadth -- peaked seven trading days ago and has not headed back up. As a reminder, that means this indicator has not played along in the S&P rally from 1495 to the present 1520 area. If you are wondering why it feels like a chop fest out there, this is it. It's the first time we have seen that occur since the November lows.

McClellan Summation Index

Then there were the "credit" ETFs, which moved up for the first time in weeks. I wrote about this relationship between iShares iBoxx $ High Yield Corporate Bond (HYG) and the S&P last week, and that it has been steadily declining since the start of the year. Don't get me wrong -- the relative outperformance for just one day is not a big deal. But it was the first time in February that this occurred, and I did not see anyone commenting on it.

HYG vs. S&P 500

What this market needs, in my opinion, is some excitement. That doesn't necessarily mean excitement to the downside -- it means up or down. The constant grind and lack of volatility and volume has turned bulls to bears and bears to bulls, and yet both sides are complaining about the grind. Heck, just look at the Oscillator. It doesn't even oscillate anymore!

Overbought/Oversold Oscillator -- NYSE

Even the Dow Jones Transportation Average has stalled out. If we look at the chart and measure the pattern, it comes in somewhere close to between 5800 and 5900 as a first target. It would make sense for the transports to correct or go sideways at this point.

Dow Jones Transportation Average

If you wanted to be very bullish on the transports, you could take the chart all the way back to 2011 and measure an upside target near 6600. However, I have a hard time believing this index will get there without some corrective action around the current levels first -- especially when we consider that oil is now trading just a few bucks shy of $100 per barrel.


 

Overbought/Oversold Oscillator -- Nasdaq

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