Remember when there were the work-from-home stocks and the back-to-work stocks? Remember when the work-from-home stocks were the only game in town? Or, perhaps, you remember when the Bank index went down every single day?
That was only a few months ago.
Well, Wednesday was the reverse. Sort of. The work-from-home stocks were out of favor, but there was a more mixed bag from the back-to-work stocks. It was, however, a bank-love day as the KBW Bank index reached triple digits, the highest level since they fell off a cliff in February.
That's a big breakout over the black line, but that blue line represents a decent level of resistance and a filling of the gap from the initial breakdown nearly a year ago. That green line represents the base and measures to 110, so you can see despite the breakout it is not going to be an easy road ahead.
Nearly two weeks ago, I showed you a chart of the PHLX Semiconductor Sector index relative to the Nasdaq, noting that the SOX had been underperforming for the past month. At the time I noted that in the past it meant we should see Nasdaq and tech stocks correct within a few weeks. Here we are with Nasdaq and tech barely participating in this week's moves.
There is some good news, though: The SOX has begun to outperform this week, so once Nasdaq is finished with its correction and gets back to an oversold condition, we'll find tech stocks interesting again.
But now let's talk about breadth. Sure, it was positive on Wednesday, but it was a big disappointment. Net breadth was positive 870. This compares with Tuesday's net breadth of positive 1,420. Keep in mind the S&P 500 was up 26 on Tuesday and 21 on Wednesday, so these are not good readings.
But, it is even worse when we compare it to the Russell 2000. The Russell was up 33 points on Tuesday (net breadth was positive 1,420). On Wednesday the Russell was up 79 points, so more than twice what it was up on Tuesday. And net breadth was positive 870.
But was it enough to turn the McClellan Summation Index? It was not. That would require one more day of positive breadth.
The best news of the day was that the number of stocks making new highs for the NYSE finally expanded, to the best reading since the rally began in March.
As for the Overbought/Oversold Oscillator, it moved, but not that much. The oversold condition that developed just before Christmas will be back to overbought by Friday, when we get the December Employment report.