A Zig-Zagging S&P

 | Apr 05, 2013 | 6:00 AM EDT
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I realize Thursday's rally looked pretty standard, given the market slide that preceded it, but there were some interesting statistics underneath.

Let's just begin with this: For the last 11 trading days, the S&P 500 has closed one day up, the next day down, the next day up -- and so on. 11 sessions ago, it closed at 1558, and on Thursday it closed at 1559. Everyone wants to know where the correction is; well, it definitely isn't in the index, unless you count sideways action.

Let's do just a quick list. Since mid-February, the Merrill Lynch Oil Services HOLDRS (OIH) has sunk 10%. Since the S&P started this zig-zag pattern, the KBW Bank Index lost 5%, with many individual issues giving back much more than that; for instance, Goldman Sachs (GS) is down 10%. The beloved SPDR S&P Homebuilders (XHB) is down 7%. I won't even get into all those economically sensitive groups, since we all know how poorly they have acted.

The bottom line is that we've seen plenty of corrective moves; it just hasn't been evident in the major indices. Just take a look at the Oscillator, which is based on the advance-decline line. I can assure you it would not have been trading so low if individual stocks had been acting well these last few weeks.

Overbought/Oversold Oscillator -- NYSE

Now, I want everyone to hang on to their hats, because I'm seeing one statistic that revealed quite bullish action Thursday. Thursday's net volume on the Nasdaq -- which I use to determine how well this index is acting -- registered its best reading since March 20. I went back and double-checked my math because this looked so odd.

It might not sound like a big deal, but look at the table below. Thursday had the lowest point gain for the Nasdaq, yet it was on the biggest breadth gain.

Nasdaq Volume

None of this changes the intermediate-term indicators from their current downward slopes, but the reason the indicators are all pointing downward is that the underlying statistics and breadth have been so poor. It will take more than one day to change the trend, but I thought the statistic was interesting enough to note as an initial sign of change.

One other change was that the index put-call ratio came in above 100% for the first time in 13 trading days. In Monday's column I noted that the string had been the longest since March 2009, and that volatility had resulted in the other two cases. Well, we did see some volatility this week, and it was enough to finally get the index put buyers back in the game.

Finally, as a follow-up my discussion on the 10-year U.S. Treasury note from a few weeks ago, yields have come down an awful lot, and they are currently sitting at 1.75%. They are just about to hit an uptrend line. Unless these gap up under that uptrend line on the employment number, I'd expect some sort of short-term lift in rates before they'll pull back again.

10-Year Note


Overbought/Oversold Oscillator -- Nasdaq

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