• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • TheStreet Smarts
  1. Home
  2. / Investing

Has Everyone Become This Complacent in Just One Week?

Just a week ago folks were fearful as the put/call ratio rocketed to 117% and 115%, respectively, but after Monday it sits at a more neutral 92%.
By HELENE MEISLER
Sep 18, 2018 | 06:00 AM EDT

With the exception of that spike in interest rates in early May the yield on the 10-Year Note has not been able to get up and over 3% for longer than a day or two. And even the May spike only lasted a week before it came crashing down.

I have been of the mind that we would see rates in a trading range where every time we got down in the 2.75% range we'd rally and when we got up near 3.1% (May's high) we'd sell off. But here we are stuck at 3% once again.

I note this because the Daily Sentiment Index (DSI) for the 10-Year Note is currently at 29. For almost all instruments we see that a reading under 10 means sentiment has gotten far too bearish. Yet when it comes to bonds, 20 seems to be the "too bearish" level. This is one reason I have thought that a breakout over 3% toward 3.1% would be a last gasp within the trading range. Because a move over 3% would surely take that DSI down under 20 in a hurry.

But am I asking too much? Is it possible that the lid really is this 3% zone? A small back-off from 3% followed by another push should get folks excited over a move higher than 3% but even I must admit this round number has been a brick wall.

In the meantime I saw an article in the Wall Street Journal on Monday that said small caps had outperformed large caps this year. They had so many statistics my head was spinning. But I went to inspect the chart of IWM relative to SPY and sure enough, the ratio is up since the calendar turned to 2018. The problem is that this article should have been written in June, not now. As you can see, now the small caps have underperformed for the last three months. And if you squint you can see there was a lower low on Monday.

My view has been that this ratio will make its way down toward the bottom of the range and when it gets down there we'll probably like small caps relative to big caps. When we look at the chart of the Russell itself we see it is trading roughly the same place it was in mid-June; it's been a giant sideways move. It now finds itself on this uptrend line.

I'd love to see it break the uptrend line because I think we might see a sentiment shift if that happens. Just a week ago folks were more fearful as the put/call ratio rocketed up to 117% and 115% respectively. Now after a day like Monday it sits at a much more neutral 92%. Has everyone become that complacent in just one week?

Finally, I don't think I have ever seen Nasdaq's Oscillator refuse to lift while Nasdaq rallied, not to mention it collapsed from a higher high. It is oversold.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.
TAGS: Investing

More from Investing

So Far My Tax-Loss Selling Recovery Strategy Is Paying Off Big-Time

Jonathan Heller
Feb 4, 2023 12:30 PM EST

Here's how I'm making out on these names that were down at the end of last year.

How to Trade an Irrational Market

James "Rev Shark" DePorre
Feb 4, 2023 10:00 AM EST

The crowd of investors is often irrational, but most of the time it's right.

3 New Dividend Aristocrats for 2023 -- And Your Portfolio

Bob Ciura
Feb 4, 2023 7:15 AM EST

New to this exclusive club, these names have proven effective long-term compounders of shareholder wealth and dividend income.

In a Week Full of Surprises, This Was the Market's Biggest

James "Rev Shark" DePorre
Feb 3, 2023 4:42 PM EST

We had the Fed's rate decision, jobs numbers, and mega-cap tech earnings land. But here's what was the wildest action.

3 High-Yield REITs for Safe Dividend Income

Bob Ciura
Feb 3, 2023 2:31 PM EST

These names have joined the ranks of the world's most elite dividend growth companies as Dividend Aristocrats and/or Dividend Kings.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 02:58 PM EST REAL MONEY

    Sarge Guilfoyle Breaks Down the Jobs Report, Fed Policy and Stocks!

    Watch it here!
  • 11:35 AM EST JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    Trading an Irrational Market
  • 02:10 PM EST REAL MONEY

    Fed Rate Decision

    Fed Lifts Benchmark Rate by 25 Basis Points, Sees ...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2023 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

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.

FactSet 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.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login