As if right on cue we saw folks who were cavalier about Tuesday's decline, where mega-cap tech held strong, get concerned about the market on Wednesday as the "most mega" of the megas fell. Yes, I am talking about Apple (AAPL) , which still controls in the indexes.
You know the wild thing? There was more chatter on Tuesday about Apple's decline than there has been about the transports, which have taken out the August low.
Here's something else that was interesting during the mostly nothing day in the market on Wednesday: Breadth was quite a bit better on Wednesday than it was on Tuesday. Tuesday saw the S&P drop 19 points with net breadth at -1,650. Wednesday saw the S&P drop 31 points with net breadth at -700. I figure that's the Apple effect, because it really does control the indexes.
If you are wondering how I know that folks became more concerned about the market due to Apple's decline, part of it is anecdotal, but then there is the total put/call ratio, which zoomed up to 1.24. That would put the ratio back to roughly where it was on Aug. 16. So yes, I think folks got more concerned on Wednesday. Remember my thesis is that this pullback toward an oversold condition will keep/move sentiment toward a more cautious/bearish position.
Speaking of the put/call ratios, the 21-day moving average of the exchange-traded fund put/call ratio has now joined several of the other moving averages by pushing up toward the top of the range. It hasn't rolled over yet and the match says it's possible it climbs further, but notice that the last time we checked in on it in late July/early August it was at the bottom of the range. At the bottom of the range folks are complacent, at the top they are a bit more fearful.
The market remains all about the bonds and bonds were steady on Wednesday, so we didn't see much change in the Daily Sentiment Indicator (DSI). It remains at 21.
As for the Oscillator, it has not yet come off the boil. I expect we will see it come down much more in the week ahead as the math behind the indicator should send it back down again.
As we get closer to an oversold condition, it occurs to me that one week from Friday, on Sept. 15 -- mid month! -- it is Rosh Hashana, the Jewish New Year. There is an old adage in the market: Sell before Rosh Hashana, buy before Yom Kippur. Yom Kippur is 10 days after Rosh Hashana.
Why am I fussing over this? Because it happens to be one of those adages that works a majority of the time and this year it happens to coincide with the market getting oversold mid-month. I suspect if the market is lower as we head into the holiday we will hear folks chatter this up.