Just prior to Christmas, I wrote that I didn't think the current market looked like it looked in January 2018. There were several reasons, but one of the main ones was that by mid-January, we saw some divergences. One of the divergences arrived in the cumulative advance/decline line. It peaked about a week before the S&P did.
This wasn't a huge divergence, but it was a divergence all the same. But we also saw the number of stocks making new highs tail off back then, as well. They peaked around mid-month and the S&P kept on going.
None of that is the case today. That doesn't mean we can't have another whack like we had then, but I also thought there was recency bias in the market where too many had that 2018 market fresh in their minds.
But now there has been a non-stop call that certain stocks have gone parabolic, just as they did in 1999 to 2000. I have already stated here that I think this market doesn't look like that market and I will once again highlight market breadth. Just look at the chart of market breadth from 1998 to 2000. In this market we are making new highs in breadth, 20 years ago we were making new lows.
But let's talk about Apple (AAPL) , where folks think we've gone parabolic. I disagree. Is it a steady rise? Yes. I call it stair-step. It barely corrects. It is not my kind of chart, because I like ups and downs, not steady ups. But is it parabolic? I think not.
Should Apple break that uptrend line it will be problematic, but this chart has been Steady Eddie, not parabolic.
Compare this Apple chart to the chart of Qualcomm (QCOM) from 1999 to 2000. Qualcomm was also Steady Eddie throughout much of 1999: rise, sideways, rise, sideways, and so on. It wasn't until early November that the stock took off and rallied 75% in a couple of weeks. Then it went sideways and digested that gain-for nearly a month.
Then, in late December the stock rallied about 60% in a matter of days. That is parabolic.
Apple, in my view, is not. I realize it sounds ridiculous, but it's taken Apple six months to rally 60%. Compare that to three days. It's just not apples to apples (get it).
It's possible Tesla (TSLA) is looking a bit 1999-ish. And really, it's not nearly like Qualcomm from 20 years ago. But the stock did rally about 40% in two weeks this year, so it goes in the "maybe" pile.
What should concern us in the near term is that the Daily Sentiment Indicator (DSI) is over 90 for the S&P and Nasdaq. This is only a daily reading, but each one at 90 during this rally has resulted in a subsequent down day.
In addition to that, the equity put/call ratio's 10-day moving average is now back where it was in mid-2014. The total put/call ratio's 10-day moving average is back to where it was in late January 2018.