One thing is for sure, folks have turned cautious. We can hear it in the chatter around us. We see it on financial television. We see it in financial publications. But do we see it in the statistics? Yes and no.
The CNN Fear and Greed Indicator is down to 15%. Typically, once it gets under 20%, there is some fear in the market. Friday's total put/call ratio scooted up to 111%, but some of that was likely attributable to it being a Friday.
But do we see the kind of panic that typically accompanies a terrific low? I do not. I see caution, not panic. And quite frankly, with the way the intermediate-term indicators look, I think the only reason we don't have real panic is because we have not had a fast market. This has been more of a slow-moving train wreck.
Just look at the Hi-Lo Indicator for the NYSE. It is at 34%. Just last week (when we last checked in on it) it was around 45%. So it's falling fast. That is actually good news. Why? Because once it falls under 15%, the market is intermediate-term oversold.
What to notice on this chart is that it is no lower than it was last November. And yet the S&P is much higher. This tells us of the deterioration underneath.
Now look at the 30-day moving average of the advance/decline line. While it looks as though it is oversold because it is sitting at the zero line, it is not. It's still too soon to estimate when it will be oversold; perhaps in mid-September.
Yet we are very much short-term oversold -- again. You can see on the chart of the Overbought/Oversold Oscillator how deep the current oversold condition is. Nasdaq's is also quite oversold.
In recent weeks, we've seen the market get oversold and work it off with one or two up days or a lethargic move sideways. I don't expect this oversold rally to be vastly different from the others, but I do expect one later this week. One reason is that there were actually fewer stocks making new lows on Monday.
It was also the first day the transports and the Russell 2000 didn't lead on the downside.
Perhaps there will be some "positive" news out of Jackson Hole, Wyo., later this week to give the market some sort of oversold bounce. But I'm keeping my eye on the intermediate-term indicators and I'm going to wait patiently for them to get oversold.
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