There's Something Happening Here, What It Is Ain't Exactly Clear...

 | Mar 15, 2017 | 6:00 AM EDT
  • Comment
  • Print Print
  • Print
Stock quotes in this article:

xle

,

HYG

,

JNK

Can you feel the shift in sentiment? It's subtle but it's still happening.

For example, it has been at least three weeks that I have harped about the small-caps (OK, more like three months, but...). On Tuesday, we saw folks "warn" that there was a problem with the small-caps, probably because they are down on the year. For weeks, the transports have been under pressure, acting awful, and are now down 4%, with many of the beloved airlines down close to 20%, and Tuesday folks finally noticed there's a problem.

Then there are oil and the oil stocks. Here, too, there has been a lot of "down" going on; Energy Select Sector Fund (XLE) is down 12% from the highs in December. No one cared. Tuesday, they began to fret.

Folks have also begun to notice the high-yield bond market (HYG) and the junk-bond market (JNK) that we looked at last week when they began to roll over.

So we can see the sentiment shift taking place. We can see these issues that have been bubbling under the surface for weeks are finally being realized. The one indicator where I have seen it the most is in the Investors Intelligence bulls. Just a few weeks ago, it ticked at 63.1% bulls. Two weeks later, 53.4% of the respondents are bullish. While this is the fewest bulls we've seen since just after the election, there are still too many bulls with the reading over 50% for me to feel sentiment has become "too concerned." But it surely has shifted.

But the question on everyone's mind is, "Why don't the major indexes go down?" I can't say for sure, but what I can tell you is that in recent weeks we have looked at previous years when the major indexes refused to acknowledge there was weakening underneath the market. But ignoring those weaknesses was only temporary; eventually the major indexes played catch-up on the downside.

Once again I draw your attention to the chart of the McClellan Summation Index. That is not a gradual rollover but rather a plunge since the calendar turned to March. As of now, it will take a net differential of +3,100 advancers minus decliners to turn it back up. That's two amazing breadth days in a row. It's doable, but it seems to me that typically we will see sentiment get much more concerned before this can turn up with any vigor.

There is one other statistic to note. The number of stocks making new lows on Nasdaq increased ever so slightly on Tuesday, the first time since before the election that there were more new lows than new highs for Nasdaq. Nasdaq has been relatively unscathed in 2017. Now we see the first signs of weakening here, too.

I suspect we will see more concern about the whole market before this correction is done.

For more market analysis from Helene Meisler, sign up for Top Stocks, published five times a week.

Columnist Conversations

join me today for a free webinar, we'll be talking about the markets, interest rates and the Fed.  after ...
we have a big winner here, we'll roll it up SOLD XLNX MAY 55 CALL AT 9.55 (in at 5.70) BOUGHT XLNX JUN 6...

BEST IDEAS

REAL MONEY'S BEST IDEAS

News Breaks

Powered by

BROKERAGE PARTNERS

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data provided by Interactive Data. Company fundamental data provided by Morningstar. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by Interactive Data Managed Solutions.


TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

IDC calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.