Oh, those banks! They are teasing me, aren't they? I mean how many times in the last two years have they tagged this downtrend line and, well, that's all they've done is tag the line and head back down? That remains the case for now: a tag of the line, but no crossing. Not yet.
Perhaps it is all related to the yield on the 10-year Treasury note, because we have a downtrend here, too, that is about to be tested as it approaches 1.80%. I am not as committed to this particular line as I am to the one on the Bank Ratio chart. The reason is that the Bank Ratio chart is so much longer term, and if I drew this one below with a different pencil we would have seen it rise over it in September, only to come down again. But clearly many eyes will be on it.
Tuesday's Rally Gets Mixed Reviews
What about the statistics from Tuesday's rally? Well they were mixed. I know I keep saying that, but it's true. Let me show you.
We'll start with breadth. Overall the cumulative advance/decline line made a higher high. That is bullish; you cannot turn that into a negative. But when we look at breadth on Tuesday vs. last Friday, it's another story. Tuesday's net breadth on the New York Stock Exchange was positive 840. The S&P was up 29. Friday the S&P was up 32. Net breadth was positive 1,560, almost twice as much as we had on Tuesday.
And what does this do to the McClellan Summation Index? Oddly, not much. It is barely up in the last week, yet the S&P has rallied 100 points. And what's more is it will only take a net differential of negative 600 advancers minus decliners to roll it back over. Not much of a cushion after a 100 point rally, is it? But up is up.
I call it mixed.
Then there are the number of stocks making new highs. The New York Stock Exchange had 102 new highs. Friday had 112, so it's not as though it's expanding. And overall, the last time we were up here, at 3,000 on the S&P, there were over 200 new highs. The time before that, there were 300 new highs.
Nasdaq had a few more new highs than it had last Friday, but still not as many as the prior times it was up in this area. Not to mention there were still more new lows than highs on Tuesday for this exchange.
Yet the flip side is that the 10-day moving average of stocks making new lows is heading down. If it were heading up, I'd be more concerned.
The 10-day moving average of the put/call ratio is still heading down. The big test will be when we see how bullish the American Association of Individual Investors gets on Thursday. So, as you can see, my indicators are still mixed. I wish I could change that, but I can't.