Very little changed in the market on Wednesday. In fact I'm not sure any of my indicators moved more than a fraction when all was said and done.
That means breadth hung in there. It wasn't sour enough to matter. It wasn't good enough to matter.
You will notice that the Overbought/Oversold Oscillator has ticked down as it works off that overbought reading we got two weeks ago. That's a momentum indicator, so it means the market has lost its upside momentum for now. That's resulted in this chop-fest we've had this week.
Elsewhere sentiment saw the 10-day moving average of the put/call ratios move lower. The equity put/call ratio's 10-day moving average is now back to where it was in early September. The total put/call ratio hasn't quite gotten that low yet.
The Investors Intelligence bulls ticked up marginally to 64.7%, so there was no backing off there. These extremely bullish readings are why I continue to be focused on the breadth of the market. As long as that is steady to positive, then we can't get too concerned. If breadth falters, the market ought to follow shortly thereafter due to the extreme sentiment.
I would make one other observation: the Volatility Index closed at the high of the day, which is unusual for a day when the S&P 500 also closed at the high of the day. In addition, the VIX has been moving up the last two days, and thus far has been unable to take out last Friday's low. As a reminder the Daily Sentiment Index (DSI) for the VIX was single digits late last week. I think it means we should see some volatility sometime soon.
Over in bond-land, folks are fussing a bit over the rise in rates. I am going to round it up to 1%, where that downtrend line comes in. That's because that would clear the prior high and cross the downtrend line. It would probably bring a whole lot of chatter about just because it's such a big round number. The current DSI is only 53 on bonds, so it's not as though this week's move has gotten sentiment to any extreme. Not yet at least. Friday's employment number could change that.
Finally, I was asked if I had an upside target on the gold exchange-traded fund (GLD) . I do not. I could fuss and point out the little gap that is about to get filled around $172-ish, but I'm more focused on that $175 area, because that's where GLD broke down from and it's where that funny channel line comes in. I say funny channel, because it ignores that gap up in early November. If we ignore that gap up (and back down), that line has been almost textbook since the break in August. So let's say that's the place I think it runs into trouble.
