• 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
    • Trifecta Stocks
  1. Home
  2. / Investing
  3. / Stocks

We Fell, but It Could Have Been Worse

Given the news of the day, you'd think we would have had a violent pullback -- instead here's what we got.
By HELENE MEISLER
Oct 14, 2020 | 06:00 AM EDT
Stocks quotes in this article: JNJ, LLY

Considering some of the news we got on Tuesday, I was surprised the pullback wasn't more violent.

It really is beginning to sound like stimulus will not happen in the next few weeks, although everyone I see interviewed is convinced it will happen eventually. That was the same situation we had in August, and then September rolled around and markets second-guessed that view.

Then there was the vaccine news from Johnson & Johnson (JNJ) and the antibody news from Eli Lilly (LLY) : Both had to pause trials because study participants fell ill. A month ago, the S&P would have been down 2% on that news, but that's not what happened. To me it looked like a typical overbought pullback. For now.

I will change my mind and become much more concerned if breadth deteriorates, while the indexes rise. Breadth was negative by about two-to-one on Tuesday, but it wasn't enough to change any indicators. It did push the Overbought/Oversold Oscillator down from the overbought condition we saw late last week.


I will change my mind and become much more concerned if the number of stocks making new lows begins to expand in a major fashion. For now, the new lows remain modest. Yes, the 10-day moving average of the New York Stock Exchange lows ticked up, but as I explained two days ago, I believe that is just the math. Should the 10-day moving average still be rising late this week, I would get concerned, because that would mean we're clocking in at over 40 new lows daily.

For now, the McClellan Summation Index is still rising. It would take at least two more days of negative breadth like we saw on Tuesday to get it to stop going up so there is still a cushion there.

But I am disappointed in sentiment. I think it is still a little complacent. The put/call ratio didn't even get over .80 during Tuesday's decline. We'll see what the more intermediate-term Investors Intelligence bulls and bears look like when they are released sometime on Wednesday. I do expect the bears to have pushed back down, perhaps under 20%.

Remember, breadth has been terrific for the last few weeks. So what we don't want to see is breadth turn sour and the mega-cap tech stocks rise. That becomes a recipe for negative divergences and too much excess in mega-cap tech, which leads to swoons like we had in September.

For now, it still looks to me like this is a short-term overbought pullback after a nice run. I would expect after this pullback we'd try and rally again. Keep in mind my Saturday Twitter Poll was heavily skewed toward those looking for more upside and that tends to lead to choppy to down weeks.

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 | Technical Analysis | Bearish Bet | VIX

More from Stocks

Coupang Could Make a Bigger Trading Bounce

Bruce Kamich
Jul 1, 2022 1:56 PM EDT

Here's where nimble traders could probe the long side.

Shares of Xencor Could Be Bought on a 50% Correction

Bruce Kamich
Jul 1, 2022 11:59 AM EDT

Traders should remain patient.

Let's Size Up the Market's Prospects for the Second Half of 2022

Bret Jensen
Jul 1, 2022 11:30 AM EDT

The next six months can't be worse than the first six, can they?

In an Ugly First Half for Stocks, Value Was a Lot Less Ugly Than Growth

Jonathan Heller
Jul 1, 2022 11:00 AM EDT

A look at the Russell indexes shows that value stocks suffered in the first six months of 2022 but not nearly as much as growth issues.

Nuvalent Has Begun the Bottoming Process

Bruce Kamich
Jul 1, 2022 10:52 AM EDT

Let's check the charts and indicators.

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

  • 07:59 PM EDT PAUL PRICE

    Very good quarterly numbers from Bassett Furniture (BSET)

    Bassett Furniture (BSET) blew right through analys...
  • 04:41 PM EDT PAUL PRICE

    First Half Results - Putrid Second Half Results - Likely to Be Much Better

    It's great that we're done with June. 2022 marked...
  • 04:51 PM EDT PAUL PRICE

    We Should Be in for Better Starting Soon

    Window dressing Thursday, the last day of the...
  • 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