• 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
    • Bruce Kamich
    • Doug Kass
    • 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

Bullish and Overbought

The market moves to a short-term overbought condition on Thursday, breadth has been positive, and the intermediate-term indicators are still positive, so I expect a dip or a pullback, and then we rally again.
By HELENE MEISLER
Sep 12, 2019 | 06:00 AM EDT
Stocks quotes in this article: AAPL, WMT, TGT

The market has a funny way of doing things.

Just over a week ago, I noted how all the optimism had been wrung out of the market, how everyone had forgotten about Apple's (AAPL) great quarter. How folks had forgotten their cries of the consumer is not dead, as when they saw Walmart's (WMT) and Target's (TGT) earnings. Instead, they were so focused on bond yields and how they kept going down.

Sentiment was lousy. The put/call ratios were high. Heck, the put/call ratio on Aug. 30 was a whopping 125%. That same day the put/call ratio for the Volatility Index was 17%. Sure, the very next trading day the market was down, but the Dow Jones industrial average hasn't seen a down day since then. Not one down day in six. The last time the Dow went more than six straight on the green side was in May of 2018 -- more than a year ago.

The news hasn't changed much. Sure, there's hope for China trade talks now, but, honestly, there was trade talk hope after the Chinese announcement on Aug. 29, and still sentiment was dour.

The market moves to a short-term overbought condition as of Thursday. For nine of the last 10 trading days, breadth has been positive. That's bullish, but it also makes us overbought.


So why do I say the market has a funny way of doing things? Because when the S&P 500 was flat for three days and Nasdaq was red, and no one got terribly bullish. Then the S&P rallied and so did Nasdaq, and all of a sudden the put/call ratios plunged. Just as we reach an overbought, folks decide to get bullish.

The total put/call, was 78%, which is just "this" low side of neutral. It hasn't been this low since July 23. That's quite a change. Couple that with the put/call ratio for exchange-traded funds, which was under 100% for two consecutive days -- something we haven't seen since early July -- and we know the conversion is finally taking place.

Now, let me report that the various moving averages of the various put/call ratios are still trending down, and none are extreme yet (supportive of the market), but it is sort of funny the way folks finally threw in the towel, just as we reach a short-term overbought reading isn't it?

I remain concerned that the number of stocks making new highs is still paltry, but the number of stocks making new lows has contracted to single digits for the New York Stock Exchange, which is something not seen since early April. For Nasdaq, we haven't seen so few new lows since January. This means for now the 10-day moving average of new lows continues to fall.

The intermediate-term indicators are still positive, so while I expect a dip or a pullback, I still think we would rally again after that. The Dow has gone six days in a row on the green side, it can go more, but the longer it goes without a down day, the higher the likelihood it has one.

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: ETFs | Investing | Stocks | VIX | Bearish Bet |

More from Stocks

Nasdaq's Key Line, Fed Minutes, Trouble With the Yield Curve, Sun Valley Deals?

Stephen Guilfoyle
Jul 7, 2022 7:27 AM EDT

The FOMC flat out tells us here that they are willing to damage the economy in order to get a handle on and tamp down consumer-level inflation.

You Bet Your AZZ This Stock Is Ready for a Catchup Move

Paul Price
Jul 7, 2022 7:00 AM EDT

This global metal coating company is under-followed, but not to be ignored.

Market Meanders Into Nowhere

Helene Meisler
Jul 7, 2022 6:00 AM EDT

We're in a chop-fest, and not only are stocks stuck in either/or mode, so are the indicators.

This Is No Market for Commitment

James "Rev Shark" DePorre
Jul 6, 2022 4:55 PM EDT

After Tuesday's rotational moves, Wednesday was choppy. Here's why this is not a time to make long-term trades.

This Won't Hurt a Bit: Moderna Could Rally 25% From Here

Bruce Kamich
Jul 6, 2022 2:59 PM EDT

The stock is ready to make a recovery rally.

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

  • 12:01 PM EDT PAUL PRICE

    A Recent Director Buy in Children's Place (PLCE)

    Four of the most recent insider trades in Children...
  • 07:34 AM EDT PAUL PRICE

    A $525,000 Vote of Confidence on Macerich (MAC)

  • 09:49 AM EDT JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    Stop Wishing, Hoping, and Praying and Take Control...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2022 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