After a week of choppiness we finally got a big push up. Breadth improved -- finally. But it did not improve enough to allow the cumulative advance/decline line to make a higher high. And it did not improve enough to get the McClellan Summation Index from heading down. The Summation Index still needs another good breadth day, of positive 500 advancers minus decliners on the New York Stock Exchange.
To put that number in perspective, Friday's rally gave us positive 720 net breadth, so basically another day like Friday is needed to turn this particular indicator back up.
I've been talking a lot about the number of stocks making new lows lately. That's because it is so unusual to see triple digit readings in Nasdaq new lows when the index is at new highs. Friday was no exception, as there were 115 new lows on Nasdaq. That makes the last four days with triple digit readings.
When it comes to new highs, they are not terribly impressive, either. But I thought we'd look at them on a 10-day moving average as well. Nasdaq is in better shape than the NYSE. Nasdaq's moving average peaked in early November and has been sideways to down for the last two weeks. The pattern looks a bit similar to the July -- peaking, sideways and down. But it is impressive because of the terrific run it had off that October low. It has made a higher high, which is why it is in better shape than the NYSE. But the momentum has been waning -- thus my complaints this last week or so.

Now take a look at the NYSE. Not only has it turned down dramatically from the early November high, but it has done so from a lower high than the August high.

Sentiment is now decidedly giddy. I await this week's Investor's Intelligence report: We should see the bulls over 60%. But on a more immediate basis, the equity put/call ratio was under 50% for the last two days. It hasn't had consecutive readings under 50% since mid January 2018. Before you gasp, know that the rally went on for two more weeks, but let's take a look at the 10-day moving average of this indicator.
It is now at the lowest level since June 2018. Despite being under 55% then, it is still at 56% now. In mid June 2018, we had a correction, not a collapse as we had in January 2018, so not all low readings lead to a collapse. But a correction? Typically, yes.

The Daily Sentiment Index moved to 90 for the S&P and 91 for Nasdaq. In the past two years, we typically get multiple readings over 90 before it matters, but as you can see from the arrows on the chart -- which represent the first reading over 90 for that time period -- these readings do not come early in the rally, but late. The 10-day moving average of new lows had not turned up yet when those first readings arrived, nor had the McClellan Summation Index turned down as they have now.


