In my very early days on Wall Street there was a semiconductor analyst who worked for the firm. We had a morning meeting each day where if an analyst had something to say about one of his companies he spoke in that early meeting. The semi analyst was the sort who liked to read out all these numbers to us (even though we had a handout in front of us).
Here's what It was like. "Q2 revenues were XYZ which compares to Q1 revenues of ABC and vs. Q2 revenues last year of DEF". Our eyes would glaze over. And yet I am about to do the exact same thing I hated so apologies in advance!
The first two days of 2019 have seen the S&P lose 59 points. The first two days of 2019 have seen NYSE breadth positive by about 700 issues. Even net volume is positive by about 200 million shares. That's the inverse of what we saw in September when the S&P would go up but breadth would go down.
Nasdaq is no different. Yes, Nasdaq, where all the selling was concentrated on Thursday. In the first two days of the new year it has lost 170 points. Net breadth on Nasdaq is positive by 100 issues. Net volume -- and this really surprised me-is positive by about 100 million. The reason the volume surprised me is because it's the big cap stocks that tend to have the most volume and the big cap names were all down hard on Thursday.
Then there are the number of stocks that made new lows. Just about two weeks ago, on December 20, the NYSE saw 1,270 stocks make new 52 week lows. I realize the S&P is still about 100 points higher than it was on December 24 (2,346) but the number of stocks making new lows on Thursday was 40. That's a far cry from what we saw a week or two ago. Heck, we haven't seen so few new lows since the final days of August. Even the number of stocks making new highs, while miniscule at 12, is the most we've seen since mid-December. Keep in mind the market was red all day.
Nasdaq is not much different. The peak reading on December 20 was 1,153 new lows. Thursday saw 56 new lows. Nasdaq is still about 300 points higher than it was on December 24 but it's hard to imagine if it falls another 300 points now we will see more than 1,153 new lows.
And fear came back. Last Friday the total put/call ratio was 76% and the equity ratio was a very low (and bearish) 44%. Thursday's put/call ratio zoomed right up to 131% (equity was not extreme but high at 73%).
The biggest challenge for the market is there is so much resistance overhead on the charts that is it difficult to see them eating through that easily. Oh and there are no bases.
Yet I still think we can rally again before we get overbought next week.
One final note, on the bonds. Back in October with the 10 Year at 3.25% I thought yields had gone far enough and it was time for them to go back down. I thought maybe we'd see 2.8%. Boy did I ever underestimate that, with rates now at 2.56%. Yet with folks who never talk about bonds talking bonds and the Daily Sentiment Index at 93 I think bonds should pull back; it seems they are a bit overdone here.