Like Carol Merrill of "Let's Make a Deal," I showed you last week what was behind doors one, two, and three for the market. At least for Friday, it chose No. 1, which was not the goat!
The goat would have been more of the same, which was what was behind door No. 3. While I always welcome the rotation, the issue for this market, at least for the last more than two years, has been that door No. 1 -- down-and-out stocks playing catch up -- never seems to last and we get a few days of outperformance and then we revert right back to No. 3, which is growth outperforming everything else.
Let's talk about Nasdaq's volume, though, now. In the last week or so, I have showed you how using the McClellan Summation Index with volume it has rolled over. That began roughly three weeks ago and it means the average stock is heading down, not up. What I found most curious last week was that total volume for Nasdaq has fallen off, with Friday the lowest volume day in nearly three months. Even more curious is that the New York Stock Exchange saw no such drop off in volume.
Even if I smooth it out and use a five- or 10-day moving average, volume peaked mid-June and is making lower lows. Typically for the market, as a whole, lower volume is commonplace on rallies, so I wouldn't fuss so much. But the volume in June for Nasdaq, especially early June, was what I would call highly speculative, because as you can see volume tends to spike higher during downdrafts (see March) not upswings.
Then there is Nasdaq's volume relative to the NYSE's. We looked at this several weeks ago when I noted that the 30-day moving average of this relationship had spiked quite high. It has stalled out, though, and while you need to squint to see it, the chart peaked in mid-June. Point A on the chart was heading into October 2018, so this is worth paying attention to.
However aside from that there was little change in any of the indicators after Friday's rally. Although the ten day moving average of stocks making new lows for Nasdaq stopped going up for the first time in weeks. It didn't turn down but it did flatten out.
I would be remiss if I did not conclude by reporting the results of my Saturday Twitter Poll. which has become a regular feature over the last two months. In it, I ask what you think the next 100 point move in the S&P will be. You might recall two weeks ago we saw 60% looking for downside and 40% for upside. So, naturally, we rallied. Last week it was more even at 50-50. This week, however, we have 54% looking for upside with 43% for downside. It's only been two months, but that is the highest percentage looking for upside I've seen.
Poll results. Thanks to all who participated. Couldn't do it without you! pic.twitter.com/i24fPreKhY— Helene Meisler (@hmeisler) July 11, 2020
Oh, and the DSI for Nasdaq is now back at 93 and the S&P is up at 85, so it's a similar set up to last week where the run way is short. An up day would tend to lead to a down day.