As we head into the Fed meeting on Wednesday the market has been sloppy for the last few days.
Sure we can cite the McClellan Summation Index as a bearish indicator. Typically this indicator swings with the market but it has been making lower lows and lower highs since June. Notice the spring rallies of April and May saw the Summation Index move up. Early July saw a lift. Even mid-August saw a lift. But this last !% run in September has seen a steady decline in this indicator.
What is interesting is that just over a week ago everyone was singing the praises of the Transports because they were making new highs. Now they threaten to be down on the month.
The Utes, which I thought had topped out back in July (and yet they went on to make a higher high in August just to prove me wrong) have finally started to slip with some oomph as they are making a two-month low.
And it doesn't seem to matter that the number of stocks making new lows on the NYSE is now around 150. As I have noted they are mostly bond funds but I can't dismiss that because interest rates matter to markets and these bond funds find their way to the new low list when interest rates are rising.
If you prefer that I remove all those bond funds, then here is a picture of the number of common stocks only making new lows. There are currently 30 which q43 not bearish except that in the last two days of mere sloppiness this number has gone from 10 to 30, which is more than we can say for the number of stocks making new highs which has gone from 103 to 78.
The Bank Index and the SOX are two other indexes that can't get out of their own way and two groups I have always thought of as early movers.
Finally, the Investors Intelligence Bulls, after having slipped back under 60% (barely) are now at 60.6%. Typically once over 60% the market's upside is limited until it backs off.
Even if we look at the 10-day moving average of the equity put/call ratio we see that it is heading down (bullish for stocks) but it is getting very close to moving under 55% which you can see on the chart is often a good time for a market pullback.
We might call the last three days a correction but to me it's more sloppy and choppy than anything else. To me it's just working off the overbought reading.