The big day has arrived. Today we get to discover what the plans are for the Bank of Japan and the Federal Reserve. And let's hope one of these announcements moves the market. You see, for the last three trading days the S&P has closed at the exact same price: 2139.
It's not as though Nasdaq has been leading the charge on the upside. Last Thursday it closed at 5249 and Tuesday it closed at 5241. It's a giant chopfest here.
I spent much of the summer discussing the McClellan Summation Index. How many times did I show this chart once it rolled over in mid-July? That means it has been trending down for two months. Remember, this tells us what the majority of stocks are doing, so you can see the majority peaked in mid-July and have been trending lower ever since. Notice it has even gone to a lower low, under the Brexit lows. Perhaps this is why we have managed to remove some of the complacency in the market.
About the only good news from this intermediate-term chart is that it will now take a net differential of +1,500 advancers minus decliners to halt the slide. We have been closer before -- by that I mean we have needed fewer issues to halt the slide -- but we have not been this close while the S&P has been near the recent lows.
Then there is the upcoming oversold condition. Here there is also good news and bad news. Look at my own oscillator and note it has been making lower lows and lower highs. Oscillators are momentum indicators, so this tells you how poor the momentum has been in the market since mid-July. If the market had actually gone down Monday and Tuesday instead of up and then given it up, this oscillator would be much lower and in my opinion would have been grossly oversold. There's still a chance to get it more stretched, but I keep hoping and it keeps snubbing me.
As far as sentiment is concerned, it's still not exactly at what I'd call panic levels, but the complacency continues to seep out of the market. The Investors Intelligence readings this week chimed in with only 44.6% bulls. At the Brexit lows, we saw 41% bulls and in late May we had 35%. A reading under 40% to me says complacency is gone.
The equity put/call ratio's 10-day moving average has gone up. If the Fed or the BOJ disappoints, maybe we can get this moving average to shoot up and show us complacency has been removed from the market.
And so I remain in wait. My patience is wearing thin, as you can imagine!
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