Market Twiddles Its Thumbs

 | Feb 15, 2013 | 6:00 AM EST
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Memo to the market bulls: the Dow must rally more than 20 points Friday, or the index will come in negative for the week. That shouldn't be too difficult, now, should it? I mean, surely we wouldn't want the market to ebb and flow. It's much better when it mills around with this minor upward bias, isn't it? For the S&P 500, the price only needs to add 1 point a day in order to keep this creepy market moving along.

As far as market statistics go, I observed some minor changes Thursday. The biggest note on my list was that the Russell 2000 rose and that breadth was flat -- and breadth is usually positive when the Russell is climbing.

This has also meant that the McClellan Summation Index, a breadth-based indicator, still hasn't turned upward. Breadth has now been positive for seven out of the past 10 trading days, and the McClellan seems exhausted. It won't take much to get it moving back up, but it hasn't been able to do so for two weeks now.

Another minor change was the upward creep in the number of stocks making new lows. Oh, it's nothing to write home about -- not yet, at least -- but it's notable that Thursday saw two rather recognizable names on the list: Coach (COH) and VMware (VMW).

Another minor change was in the put-call ratio. For weeks now, every minor downtick in the S&P -- sometimes as little as 1 or 2 points -- has seen the put/call zoom above 100%. That is, investors have had a propensity to hedge, or buy puts, at any whiff of a downturn. On Thursday, however, the put/call ratio chimed in at 83% -- its lowest reading since Jan. 18. It's possible this could be an effect from this options-expiration week, but it is nonetheless a change from what we saw earlier in the week.

Otherwise, I am now closely watching two charts, and one is the Dow Jones Utility Average. I recently wrote that this 475 area would be troublesome, and it has indeed spent much of the month of February toying with that level. The index ought to see a standard pullback toward that 465 area (thin line on the chart), but if it breaks that uptrend line, it will be time to fret.

Dow Jones Utility Average

The other chart is that of the KBW Bank Index (BKX). The other day I noted there was a measured upside target around the 56-to-57 area, and the index keeps trying to reach that level. In the meantime, this uptrend line -- which has been in place since the November lows -- continues to hold. Should it break, the S&P 500 will likely not be far behind.

KBW Bank Index

For those who watch the Financial Select Sector SPDR (XLF), meanwhile, the measured target is $18 to $19.


Overbought/Oversold Oscillator -- NYSE

Overbought/Oversold Oscillator -- Nasdaq

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