• 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

The Momentum Is With the Upside While We're Still Oversold

Breadth was the best we've seen in about 18 months.
By HELENE MEISLER
Oct 17, 2018 | 06:00 AM EDT

The most surprising aspect of the Tuesday rally -- at least for me -- was that the put/call ratio was 103% even at the end of the day. That tells me the acceptance of the rally was not there.

I heard complaints about the volume. Volume has always increased on down moves and lightened up on up moves. It's been that way for years. And to call Tuesday's volume light seems incorrect to me. Here is a chart of Nasdaq with volume. Does that look like light volume to you? It was higher than Monday's down day and pretty much in line with the last two weeks.

Another complaint was the banks didn't participate. They didn't. The banks have been awful for weeks now. But one thing has changed. Weeks ago everyone loved them. Can you remember the last time you heard someone on television recommending the banks? They wouldn't dare. Yet Bank Index was red in the morning and reversed late in the day to close near the highs.  I think the Banks deserve an oversold rally.

There were other complaints too but let's remember we're oversold. That doesn't change just because we rallied one day. It's still too far away to peg closely but the Oscillator looks as though it won't get overbought until around Friday, October 26.

This doesn't mean we will rally every single day between now and then but it means the momentum is with the upside while we're still oversold.

The Hi-Lo Indicator only just fell under 15% late last week. Nasdaq's only did so this week. The NYSE is now at 8% and Nasdaq is at 11%. That's still oversold.

Breadth was the best we've seen in about 18 months. In fact, the McClellan Summation Index which has been in a downtrend for months, but most notably fell off a cliff six weeks ago needed a net differential of +2,600 advancers minus decliners to reverse as of Tuesday morning. It now only needs +300. That is within reach.

The 10-day moving average of the put/call ratio has finally pushed itself up into higher ground. It has not yet rolled over. I still expect it will do so later this week.

Finally I would point out that the day started out with the small caps lagging but at the end of the day they had outperformed for the second day in a row. We haven't seen a move like that in the ratio since mid-August. But in mid August the ratio wasn't at the bottom of the range. Now it is.

The charts still look bad. But as I have said bad charts turn good and good charts turn bad. I doubt we'll see a rally every single day but we're still oversold so the declines should give us another rally attempt.

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

I See a Way to Make Some Bread Off of Toast Inc.

Bret Jensen
May 28, 2023 7:00 AM EDT

Here's an options play on this software company for the restaurant industry.

Don't Just Sit There and 'Hope' for Your Stocks, Make a Decision

James "Rev Shark" DePorre
May 27, 2023 10:00 AM EDT

The biggest investing and trading mistake that people make is that they don't have a plan.

3 High-Yield International Oil & Gas Majors

Bob Ciura
May 27, 2023 7:15 AM EDT

The top global energy names are returning more cash to shareholders through dividends and share repurchases.

Nvidia Caught Traders Off Guard, Will Debt News Do the Same Soon?

James "Rev Shark" DePorre
May 26, 2023 4:57 PM EDT

We got a broad rally on Friday after a week of narrow action -- but once the debt ceiling news hits, the market will go on to the next stage of action.

Here's What Should Recharge Tesla's Rally

Bruce Kamich
May 26, 2023 3:45 PM EDT

I have a new price target for now.

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

  • 09:48 AM EDT CHRIS VERSACE

    Latest AAP Podcast With Portillo's CEO!

    Listen in as we talk with a rising star in the Chi...
  • 03:25 PM EDT JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    Don't Just Sit There and 'Hope' for Your Stocks, M...
  • 07:32 AM EDT BOB LANG

    Webinar Thursday After the Close: Option Spread Trading

    Thursday, my good friend and colleague Sam DeMarco...
  • 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