I was lucky enough to receive a package in the mail on Tuesday evening. It contained some old, hand drawn charts from my mentor Justin Mamis. But there was something else in the box: a small bag of stock market buttons.
Justin had purchased these buttons for us back in the mid-1980s. It was his idea that when we went to visit clients we should pick an appropriate button and wear it. One of my favorite buttons read: "Cash to burn will find a match."
I seem to have lost that one somewhere along the way, but I found my second favorite one in the bag, one which is so appropriate for today's market that I have to share it with you: "Don't confuse brains with a bull market."
It has been that sort of market recently, the type where if you are throwing a dart to pick a stock you will likely make money. That doesn't make the market bad; this is just a reminder that none of us are that smart. We can all lose money, just as easily as we made it.
There were a few points of interest in Wednesday's market. First we'll start with breadth, which was good, but not great. It was good enough to stay green, but it's still not helping the McClellan Summation Index. One day of negative breadth and whatever teeny tiny gains it has made this week will disappear in a snap.
But it was the breakout in the Utes -- utilities -- that was noteworthy. It's not often you see the Utes breakout like that. That breakout now measures to approximately 930.
Then there were the banks, or more specifically, the Bank Index. I know I have been harping lately about the banks, but look at the chart: the Bank Index made its low in August and has been making higher lows ever since. It made a minor lower low on Wednesday. It hasn't broken that uptrend line yet, but that's not a good look. It ought to bounce off $108, but the Bank Index is now trading where it was in early November.
I have also been harping on the Semis -- semiconductors. Well really it's the relationship between the PHLX Semiconductor Sector SOX and Nasdaq. That peaked a month ago. It hasn't made a lower low yet, nor has it broken that black uptrend line, but again, the SOX relative to Nasdaq made a low in early August and now has had trouble making higher highs for a month.
Both the banks and the Semis were leaders heading into the fourth quarter rally. So they should be watched closely when they stop going up.
Now let's get back to interest rates. I have been of the mind that we are mostly in a trading range between 1.90% on the upside and 1.70% on the downside. But I have allowed that if 1.70% breaks we will revisit 1.50%. I bring this up because Wednesday everyone seemed to notice the bonds. A break of 1.70% would surely get more than some notice, maybe even the stock market.