• 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
    • Doug Kass
    • Bruce Kamich
    • Jim Cramer
    • 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
    • Trifecta Stocks
  1. Home
  2. / Investing
  3. / Stocks

All Mixed Up: Still No Sign Whether Bulls or Bears are on Top

Friday's action did nothing to change the indicators, but keep an eye on the Volatility Index, which could start to raise some red flags.
By HELENE MEISLER
Oct 28, 2019 | 06:00 AM EDT

I know you want me to tell you that Friday's action changed the indicators. I am going to disappoint you. They remain mixed.

Breadth, for example, remains strong. It's not as strong as it has been -- last Thursday the S&P 500 was up handily and breadth was slightly red, and Friday saw the S&P rally even more than Thursday and breadth was not even plus-400. That was unimpressive. But thus far, those two weak breadth days have done nothing to change the indicators. So far it seems they are working off the overbought condition. So they remain on the bullish side of the ledger.

Also, the cumulative advance/decline line has continued to make new highs and the McClellan Summation Index, which tells us the direction of the majority of stocks, continues to rise.

But if we move over to the number of stocks making new highs, well, the story gets more murky. For example, the number of stocks making new highs on Friday was 130 on the New York Stock Exchange. Earlier in the week, with the S&P 25 handles lower, there were 177 new highs. I have even looked at common stocks-only, because the bonds were weak late in the week, so if we take out anything related to bonds, perhaps we get a different picture. But here, too, early last week there were 162 new highs and Friday a mere 96. We are on the verge of the S&P making new highs and we can't even get 100 stocks at new highs. This goes on the negative side of the ledger.

There have been so many complaints about the light volume on the rally. I often wonder where this notion came from - that volume rises on rallies and falls on declines, because that is simply not the case. Folks rarely buy in a rush. It tends to be gradual. But when you can't stand it anymore and just want to get out, well, that's when you dump it all at once.

Take a look at this chart of total volume on the NYSE plotted on a 20-day moving average. Notice the highs in volume (green arrows) tend to coordinate with lows in the S&P. And the lows in volume (red arrows) tend to coordinate with highs in price. The two blue arrows arrived in the middle of trends, so they worked, but to a lesser extent. It seems to me if you're bullish, you should hope we don't see a pick up in overall volume.

The flip side of the low-volume-is-bullish argument is that my own volume indicator is now at 48%. This indicator is up volume as a percentage of total volume. As you can see, it is quite rare to see it fall during a rally. It's not that clear, but it really does tend to go up on rallies and down on declines. So the bull case is that when it gets to the mid 40s, it becomes oversold, therefore at 48% it is almost oversold. The bear case is that we've rallied almost 200 points in the S&P, and it has gone from 52% to 48%, all while breadth has made new highs. Now that's mixed.

Then there is sentiment, which is shifting, but is not yet extreme. The 10-day moving average of the put/call ratio continues to fall, but it is not yet under 90%, although it did not get under 90% at the September high, and we managed to correct. So I will just say the fear has been wrung out.

It is the Volatility Index that I am watching closely. The Daily Sentiment Indicator for the VIX is now 17. That's the lowest since it was 15 in early July.

If the DSI should fall under 10, that would make the VIX a screaming buy, but for now I think if we look at early July, we can see that it went from 12 to 14 and came back down - a rally and back down. That seems like a likely plan for this mixed market.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

At the time of publication, Meisler had no position in the securities mentioned.

TAGS: Investing | Stocks | VIX |

More from Stocks

Emotions Run High as Indexes Slip

James "Rev Shark" DePorre
Jan 27, 2021 4:44 PM EST

I've raised a bit of cash, but it's still unclear what will emerge from here.

3 Important Questions the Fed Answered Wednesday

Tom Graff
Jan 27, 2021 4:30 PM EST

Powell was asked a number of questions about asset bubbles and financial stability risks during his press conference.

'Mortal Kombat' on the Market

Peter Tchir
Jan 27, 2021 3:54 PM EST

Let's pick apart the wild action in individual stocks -- especially GameStop -- and see what to expect going forward.

Butterflies Are Free: This GameStop Options Play Is Hardly Ever Seen

Timothy Collins
Jan 27, 2021 3:01 PM EST

I'll take a 66% risk-free rate of return in six months anytime.

Walgreens Boots Alliance Rallies Ahead of Earnings

Bruce Kamich
Jan 27, 2021 2:45 PM EST

Has WBA rallied too much?

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

  • 11:48 AM EST STEPHEN GUILFOYLE

    Cashing in Some More Chips at Stocks Under $10

    We're trimming a position for a big gain today.
  • 08:34 AM EST GARY BERMAN

    Wednesday Morning Fibocall for 1/27/2021

    The "correction" can be coming sooner than we thou...
  • 09:35 AM EST CHRIS VERSACE

    Another Big Winner for Stocks Under $10

    We're ringing the register Tuesday morning.
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2021 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