We started out trading on Tuesday like so many other days we've had lately. The Haves found buyers right away and the Have Nots languished. The curious thing about this situation of Haves and Have Nots is that there are very few who don't see it now. If it's not a discussion about how 10 stocks have accounted for the entire rise in the index this year, it's charts showing how lopsided it has been, using any and all metrics.
So it surprised me to see that for the first time in a week breadth actually did well during the trading days and did so before the S&P 500 turned green. It wasn't widespread enough and strong enough to change any of the indicators, but it certainly was a welcome change, especially for me who continues to think we should have that "one more rally" scenario I have discussed often in the last week or so. Of course, thus far all we've been able to get is a late-day rally.
However, the one day of better breadth has not helped the McClellan Summation Index turn back up. It still is heading back down. It also was quite surprising that the number of stocks making new lows expanded on Tuesday, despite not being down that much intraday. Nasdaq had more than 100 stocks make new lows. Not only is that twice the number we saw on Nov. 2, it is the most we have seen since Oct. 27.
Then there's the PHLX Semiconductor Index (SOX), which so far peaked nearly three weeks ago. It hasn't broken down (yet). When we consider that the semis were so hated near the lows and for most of the ride to the upside, I find it rather curious that they have become the forgotten group. I mean, folks hated this group in early October despite its continued upside, and now that they have not made a higher high in weeks, there is barely a mention of them. A break of 650 and I'll bet people start to notice.
Perhaps it's because they were too busy buying puts on ETFs? You see the put/call ratio for ETFs surged to 202%. This is the second time in the last week we've seen this ratio get up over 200%. Prior to last week we had not seen a reading over 200% since Sept. 25. Thus far all this has done is help to turn the moving average lines of the various put/call ratios upward. Remember that when the moving average lines of the put/call ratios are heading up, it means sentiment is complacent.
All in all for such a mild day in the market there was a lot happening under the surface. It wasn't just the Nifty Nine that rallied, and folks seemingly loaded up on puts. Yet the number of stocks making new lows expanded. So the indexes showed little movement, but there was a lot of shuffling the deck underneath. I would still like to see one more rally before we come down again.
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