Like Watching Paint Dry

 | Dec 07, 2012 | 7:10 AM EST
  • Comment
  • Print Print
  • Print

Are market players waiting around for Congress to resolve the fiscal cliff, or for Friday's employment number, before they do anything? I ask because it sure felt like no one was interested in trading much Thursday. In fact, the market was so dull that I kept waiting for someone to tweet, "Never short a dull market," but the phrase never appeared in my Twitter stream.

As far as statistics are concerned, we have both good and bad news. On the positive side, once again, was Nasdaq breadth as measured by volume -- i.e., upside minus downside volume. This indicator has now eked out a higher high vs. last week, while the index itself is at a lower high.

Nasdaq Volume

On the negative side of the ledger, the Russell 2000 once again refused to play along, underperforming the S&P 500 and the Nasdaq. That meant another rise in the ratios of the Russell to both of the other indices. Since mid-November this indicator has been heading lower as the Russell has outperformed. In the past two days it has been a laggard relative to its bigger-capitalized siblings. If you are on the bullish side of the market, you want to see the small-cap names get back in gear.

Russell 2000 vs. S&P 500

Away from that, when the major indices first reached resistance a week ago, I drew in a line showing the resistance. When the market got overbought, that line remained in place. The pullback has been relatively mild, and saw the development of the right shoulder in a potential head-and-shoulders bottom. If the market rallies some more, I expect many will begin to see this pattern.


I have picked on Nasdaq as my example, since here the head-and-shoulders formation is quite clear and almost symmetrical. What I would like to point out is that this 3025 area is not only the neckline, but also the underside of a broken uptrend line and downtrend line. It will not be easy to get through there, and I am not yet convinced the index is set up to do so, but it surely shows us the level to which we must pay attention.

Turning again to European exchanges, which I've been reviewing all week, here is the final installment: the U.K.'s FTSE 100. This index has been toying with this 5900-to-5925 zone for a week now -- or, shall we say, for three months. There isn't much difference here from what we're seeing on the Paris Cac and the German Dax, which we looked at earlier this week. The European markets have all outperformed that of the U.S., as well as bourses in the emerging markets. But, while they don't want to decline, they are spending a lot of time spinning their wheels at the old highs, almost as if there is not enough "oomph" left to push them over the hump.

FTSE 100

Finally, I'll fulfill one more request and take a look at the chart of silver. If you'll recall, I already noted the other day that I thought gold should bounce off the support lines on its chart. It has done so -- albeit rather lethargically so far.

In any case, it's been quite some time since we checked on silver, and I don't see much to note here, other than the fact that the price has held above the uptrend line. I suppose the question is whether silver appears as though it can rally, and the answer is yes, but I don't think it will climb above $34 per ounce. To me it looks as though silver is trapped between $32 and $34. If it rallied poorly or just chugged around, it might even start to look as though it wanted to roll over and break $32. So the key is whether the metal can rally off this support area -- and so far it has not done so.



Overbought/Oversold Oscillator -- NYSE

Overbought/Oversold Oscillator -- Nasdaq

Columnist Conversations

As far as TSLA is concerned, I still have a higher target above the market at the 409 area.  I stated in ...
The TLT setup discussed in my last commentary is a bust. Key support was violated and it violated the recent l...
BBY is getting smoked this mornings(weak forecast).  The stock is off 8% after opening the session with a...



News Breaks

Powered by


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.