The one day wonder came back. Just the same as it has every other time.
I am referring to the number of stocks making new highs. Recall that terrific spike in new highs we saw on Tuesday when the New York Stock Exchange chimed in with 345 new highs. The new highs on Wednesday's rally brought us 270. So we're back to the same routine where new highs do not build, but rather peter out after a good day.
Nasdaq was oddly stagnant with 256 new highs on Tuesday and 256 new highs on Wednesday.
As far as breadth goes, it made a new high on Wednesday, but here, too, the S&P 500 was up 5 on Tuesday with net breadth at positive 1,100. Wednesday the S&P tacked on 21, with net breadth at positive 600. This is a common occurrence these days. If the S&P goes up, it does so because the market is narrow and the stocks that are most heavily weighted in that index are pulling it upward. (I'm looking at you Apple (AAPL) .) But when the wealth is spread to more stocks, the index has a mediocre day. I prefer those mediocre days.
But let's get back to Nasdaq, since that's where the action is. The Nasdaq Momentum Indicator was set to get oversold two weeks ago when I kept plugging in lower closes for it, but the indicator stopped going down. It was off by two days, because instead of Wednesday, the market started rallying on the Monday prior, but in general, it worked.
When I plug in higher closes for Nasdaq now, taking it up 200 points in the next week, look what happens. It peaks on Thursday. Recall this is not meant to pick the exact day, although when it does, it is a bonus, but it typically does a pretty good job of identifying a general time frame for overbought and oversold.
I realize at this point it's hard to imagine what might take the market down, but recall early last month ago, no one had coronavirus on their radar, either.
Let me shift to sentiment and note that the Daily Sentiment Index for the Volatility Index (VIX.X) is down to 10. Recall it has been hovering at 12 to 16 for weeks now. A single digit reading means the VIX is oversold and typically should rally.
The DSI for Nasdaq is at 85 now. Since the October lows every time the DSI has gotten to 90 for Nasdaq it has seen a pullback. Sometimes the pullback is only one day, sometimes it's more than one day, but 90 or over and it's gone too far.
So maybe later this week or early next week, we'll see the red hot Nasdaq take a breather. Or maybe it will just go up one percent a day forever. Because you know, it's surely different this time.