I like a market that ebbs and flows. I like markets that have ups and downs. I do not like markets going in one direction. I don't like when they go down every day, nor do I like when they go up every day. Perhaps I'm just too moderate for this world we now live in.
As for Monday's action, I liked that the small caps came to the party. Not only did they come to the party --arriving fashionably late I would add -- they stayed until the end. Were they the life of the party? No. But they were there enough that breadth had its best day in nearly a month.
That good breadth was not enough to turn the McClellan Summation Index back up. It remains flat lined up here, as it has been for about a week now.
I also liked that the number of stocks making new highs increased modestly. But it was not enough to surpass the readings we saw a month ago. And those pesky stocks making new lows increased again as well. Nasdaq saw the most new lows at 34 since before Christmas. These are minor issues for the market, but we did not have new lows increasing a week ago and now we do.
The PHLX Semiconductor Sector SOX rallied. But not enough to change the relationship between the SOX and Nasdaq. Like the small caps, it is going to have to work harder than this if it wants to be important again.
I also like that the Transports are up 5% since getting dismissed by so many as unimportant. There is still resistance overhead and a long way to go before we see a new high -- if we see a new high -- but at least they are no longer sitting it out. I suspect that old high gives it some trouble, especially since FedEx (FDX) is about to fill that earnings-miss gap.
I would highlight sentiment is complacent, but you know that already. You know that the various moving average lines of the put/call ratios are low. You know that CNN's Fear and Greed Index is high. You know that the four-week moving average of the American Association of Individual Investors bears are low and turning up.
You also know that the Investor's Intelligence bulls have not managed to get up and over 60%. My guess is they won't do so this week; typically it is based on weekend newsletters and Friday was a down day, which probably kept them from getting too frothy.
On a shorter-term basis, we have the Daily Sentiment Indicator (DSI) for both the S&P 500 and Nasdaq back at 90. Each time -- so far -- a reading of at least 90 has led to a quick pullback. The interesting part is that they are becoming more frequent, so at some point they will matter for more than a one-day pullback, especially since the DSI for the Volatility Index (VIX.X) is back at 9.
I have never been very good at chasing markets that are up -- or chasing when down from the short side. I don't think I can start now.