I sense a great deal of disappointment from folks in the market. It seems that, if you are not in the $500 stocks, you are not enjoying the ride. Also, oil is going up every day, yet the big oil stocks aren't zooming ahead. Oddly enough, I don't hear any of the bears telling us gas prices are higher now than they were in spring 2011.
I have discussed this issue before. So many stocks have been sitting still in the past few weeks, simply not participating in the rally. I heard someone on television lauding the railroad stocks for having been so great lately, for instance, but that person must be looking at entirely different stocks from what I'm seeing. United Pacific (UNP) was great -- from Thanksgiving to mid January. At this point, shares are still at the same price as they were a month ago. Meanwhile, Norfolk Southern (NSC) is down almost 10% from its mid-January high, as is CSX (CSX).
In light of all this, I can understand why someone asked me Monday about how bad breadth had been. But, in reality, breadth has not been bad at all. In fact it made a (marginal) higher high again Monday. The advance is not narrow; it's just lethargic.
If you want to pick on something, pick on the number of stocks making new highs, especially on the Nasdaq. A week and a half ago, that index saw 262 new highs. On Monday, there were 97.
If you want to pick on something, pick on the fact that the Nasdaq has made a higher high vs. last spring's levels, but that cumulative volume has not done so.
If you want to pick on something, pick on the Nasdaq's volume. Relative to the NYSE, it's back where it was April of 2010, which was obviously not a great time to be loading up on stocks.
If you want to focus on the NYSE instead, then pick on its total volume, which is pathetic. Below is the chart of the 20-day moving average of that data, with an arrow pointing to the Thanksgiving low. That previous low point occurred in late July.
So you can see that, when it comes to this rally, there is plenty to pick on. But the fact remains that we've seen higher highs in the McClellan Summation Index, in the high-low indicator and in the 30-day moving average of the advance-decline line. The higher highs in these intermediate-term indicators typically mean the market should back off and rally again. Yet the indices don't seem to be able to back off and stay there.
Maybe, if we ever see an explosive volume day, we'll finally know sentiment has become way too exuberant.
More by Helene Meisler