I'm Exercising My Right to Be Wrong

 | May 23, 2017 | 6:00 AM EDT
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Twenty years ago, Jim Cramer used to write a column titled "Wrong." I don't know why he stopped, likely because he is more time constrained now than he was then, but with a nod to Jim, today I am going to note some of the charts I have been wrong about lately.

Let's start with the dollar. In the middle of last week, I noted that the Daily Sentiment Index (DSI) for the dollar was at 6%. This means a mere 6% are bullish on the buck, or 94% are bearish. As of Friday, that was down to 5%. I noted that the last time we had seen a DSI this low was late April 2011, and the dollar soared thereafter. While I could not find a reason on the chart to believe we'd see a rally, I still thought there'd be one. And so far we've had a one-day bounce and then another plunge. No doubt about it, I am wrong.

There is an uptrend line that comes in here. I find it hard to believe that with the DSI so low and everyone fussing so much about the buck that it will not see a rally, but so far, wrong is wrong.

Then there are the utilities. From last December through March, I was quite bullish on the utes and then I turned neutral since they had hit my target, and so I thought they should be left to themselves. Last week, I was concerned because they seemed to finally be rolling over. Then Monday they scooted upward out of nowhere and are knocking on the door of a higher high.

What surprises me here is that the bonds didn't budge on Monday. And financials couldn't rally either. So of the three "interest rate sensitive" places I watch, only the utes moved. Granted, they haven't broken out yet -- and they might not -- but I was wrong to be concerned about them. And unless and until the utes break down, they remain supportive of stocks in general.

Then there is the SOX, or the Semiconductor Index. I did think it would bounce off 960 back in April, but I did not think it could get past 1020 so readily. Yet it has not only gotten through but the SOX has moved up an impressive 3%-4% beyond that. That makes me very much wrong.

That breakout over 1020 measures to 1080. So it's getting close to the next measured target, but I should not have underestimated this strong group.

For the current market, we should be back to an overbought condition as we get into the Memorial Day timeframe. It's still a bit murky on the exact timing because the rally has only been for the last three trading days. But at least the Overbought/Oversold Oscillator has finally lifted itself off the mat.

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



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