The either/or market remains with us. When those big-cap tech and growth stocks rally, they tend to do so at the expense of other stocks in the market. But if you looked at the various groups and charts in the market on Monday, you would notice that outside of the energy stocks and travel and leisure, the selling was minimal.
Breadth was terrible in that it was the worst breadth day in more than a week. My concern there is on a few levels. First, the S&P 500 has now rallied more than 100 points and the McClellan Summation Index continues to head down. That is hard to spin as a positive. It now needs a net differential of positive 1,100 advancers minus decliners to stop the decline and more to turn it back up. It should have turned up by now and even if it hadn't, the number it needs to turn up should be smaller at this point than it is now. It is highly unusual.
The other concern I have is that I don't recall ever seeing the S&P rally 100-plus points and the Oscillator doesn't budge. I really thought it would move this week and so far on Monday it went down. I do think it will lift before the week is done, but this nags at me, that the Oscillator cannot even lift. It's not just the New York Stock Exchange; Nasdaq's can't lift either. It's highly unusual.
Then there are the number of stocks making new highs. Nasdaq's reading was the same as last week: 208, so even there it seems unable to expand to even 300 new highs. The NYSE saw a retreat back to 150 new highs.
Thus far the number of new lows has been contained and has not expanded. Should the new lows expand that would be problematic. Nasdaq's new lows reading is at 32, so it's on the edge of going up too much.
And what of sentiment?
At least the put/call ratio did not collapse to low levels on Monday as it stayed a neutral .75. Perhaps that is also what kept the Daily Sentiment Index (DSI) from getting too giddy. The S&P stayed at 85, while Nasdaq nudged up to 87 (it was 88 last Thursday). The VIX remained the same at 14. For me that still leaves some room for these to get extreme in early July.
Despite the Oscillators not budging I still think they should go up before the week is out and if I am correct in that assessment then we should reach an overbought reading in early July along with giddy sentiment.