• 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
    • TheStreet Smarts
  1. Home
  2. / Investing
  3. / Stocks

How's the Market Cooking Up? It's Got Too Many Divergences for My Taste

Amid this chop and slop, we have leaking breadth, the McClellan Summation Index rolled over, and a growing number of stocks making new lows -- despite indexes at their highs.
By HELENE MEISLER
Nov 13, 2019 | 06:00 AM EST

Another day of chop. Another day of weak breadth relative to the major market indexes. If you're thinking you've heard me say this before, it's because you have.

I said the same back in late April. I said it for nearly three weeks back then. I said the same thing in the latter part of July. That time it was only a little more than two weeks. We are only one week into this, so you might have to get used to hearing these complaints.

Remember, not long ago I spent days -- weeks? -- praising how great the breadth was. I showed how it made a higher high in September while the S&P 500 languished below the July high. In October, it was the first indicator to make a new high. It led the way.

In the last week, it has been red for five of the last six trading days. Now, I grant you, it's not as though it has been that weak each day, but you have to admit something changed a week ago. That's when breadth stopped keeping pace. And now there is a clear divergence. The divergence alone is not the issue, it's what it has done to other indicators that derive their input from breadth.

For example the McClellan Summation Index has rolled over. It tells us what the majority of stocks are doing, so in this case the majority of stocks are either churning or heading down over the last week. In mid-April, it turned down and never went back up when the S&P did. The same thing occurred in July. In September it actually rolled over concurrent with the indexes, so there was no divergence as there is now.

If it wants to improve and get back on track then we will need to see the net breadth on the New York Stock Exchange add positive 1,200 advancers minus decliners. The last time we saw a day like that was on Nov. 1 when the employment numbers came out. The S&P 500 was up 30 points that day, just to put this in perspective.

Then there are the number of stocks making new lows. Nasdaq's new lows now number 107. That's an awful lot of new lows for a market at all-time highs. Only now, the NYSE has joined in. Tuesday saw 71 new lows for the NYSE. This is the highest reading for both these exchanges since the October lows. It is generally not a good sign when new lows are rising and the indexes are at their highs. This is not a one-day situation, either, since the 10-day moving average of both the NYSE and Nasdaq are now rising.

 
 
The indexes don't show it, but stocks have been correcting for at least a week now. I continue to think that a quick move on the downside would see sentiment get cautious in a hurry and take us to an oversold condition. At the same time,  if the Russell 2000 can breakout over 1600, we'd see sentiment get to Euphoria in a hurry.

But for now, we have a choppy market that has too many divergences for my taste.

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: Investing | Stocks |

More from Stocks

Delisting of Chinese ADRs Is Part of the New Cold War

Jim Collins
Aug 12, 2022 2:00 PM EDT

The process of dealing with a delisted stock is painful for individual investors and impossible for many institutional investors.

Inflation May Be Slowing, but That Doesn't Mean the Fed Is

Maleeha Bengali
Aug 12, 2022 1:00 PM EDT

Investors are cheering the slowing pace of inflation's increase, but prices are still way up, which means the Fed is going to continue to take liquidity out of the system.

3 International Energy Stocks for Dividends And Growth

Bob Ciura
Aug 12, 2022 11:30 AM EDT

International companies often trade at discounts to their American counterparts, which can mean better value and better yields as well.

It's Far Too Early for a Victory Lap in the Race Against Inflation

Bret Jensen
Aug 12, 2022 10:45 AM EDT

Prices are continuing to rise, particularly for labor and rent, and that could put a drag on profits and consumer spending.

Fossil Group Sounds the Alarm While NL Industries Rewards Its Shareholders

Jonathan Heller
Aug 12, 2022 10:30 AM EDT

The former signaled lower revenues for the year while the latter declared a healthy special dividend.

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

  • 08:44 AM EDT PETER TCHIR

    CPI Beats Expectations, But Maybe Not the 'Whisper'?

    Slightly better-than-expected inflation across the...
  • 01:44 PM EDT STEPHEN GUILFOYLE

    This Holding Lights Up With Strong Earnings

    Check out the latest from TheStreet's Stocks Under...
  • 09:24 AM EDT PETER TCHIR

    Jobs Report Reaction: Incredibly Strong, But Questions to Ask

    An incredibly strong July jobs report. Not only d...
  • 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