Monday was one of those market days where no one seemed terribly happy.
It's easy to understand the bears not being happy, because the S&P 500 regained half of what it lost on Friday, but it's not as though the bulls seemed thrilled, either. I say this because the put/call ratio was quite high for a day the S&P gained 45 points. In fact the put/call ratio was almost the same as it was during last Wednesday's decline. So I do not think the bulls were loving the rally. (I'll also note S&P's move shows that taking the other side of the majority in my polls seems to matter!)
But let's talk about the chart of Nasdaq. I noted this channel to you last week, and how I thought Nasdaq would come down to the lower line and tag it. It did just that on Monday. I consider this a good line, since by my count this is the sixth touch of that line. That makes the line an important one and therefore should that line break, it would signal a change since the channel (and therefore the lower line) has been in place since mid-April.
In case you are wondering why I use such thick lines, it is because it is my view that a break -- up or down -- should be enough that you can see it on a chart -- not that you have to squint to see it and not that you have to hover your mouse over the price to make sure there is a lower price. But the break should be enough to see it with the naked eye and that means breaking a thick line.
Now I have another pattern to show you. It's on the chart of the S&P. In August last year the S&P gapped down from a high, similar to the way the S&P gapped down from the June high. The main difference is that in August last year it did not leave an island behind, as it did nearly a month ago.
In any event, the S&P gapped down in early August and had no follow-through. Just like June 11, it stopped dead in its track, spent a few days milling around, and then rallied for a few days. Then it came back down. So far we have a similar pattern in June as we had in August last year.
Anyway, after the second trip down, we enjoyed a few days of rallying and again came back down, then another rally and another trip back down.
At some point this pattern matching will break down, but for now I find it interesting, because a market that does nothing for months would really frustrate the majority. Especially since I do believe we will see the market head back down after July 4.
Aside from that, there was no change in the indicators from Monday's trading to report except to note that bond fund HYG (HYG) was down on the day and made a lower low than June 11. This is quite unusual for HYG to be so red on an up day in the equity market.
It should rally before the week is out (i.e. it is getting oversold) but keep your eyes on this since I did not see anyone fuss over it.