There has been so little good news of late. Between our health concerns and the market, it is hard to determine which we should be fretting over more.
Before we talk about the statistics during Monday's market rout, I want to once again repeat that we haven't even had a rally off a low yet. Not yet. Until we get a few days at least of rallying, we can't even call it a low. And then we'd still need to come back down. And likely that trip back down would be to a lower low.
I keep showing you the chart of 2010, because I want you to understand that a "V" bottom is not what to expect. Rather, what to expect -- when we finally do get the first decent oversold rally -- will be a series of rallies and a series of declines, many of those declines making lower lows. If you need to, print that chart from 2010 and hang it on your screen so you are reminded that when we finally do have a rally, there is still a long process thereafter.
Now let us talk about Monday. Monday saw a different sort of market decline. Monday was one of the first days we saw the FANG stocks and in particular the Semis get taken to the woodshed while other stocks were down, but not clubbed the way they have been.
It has surprised me that the PHLX Semiconductor Sector SOX had not even gone under the spring 2019 low. Think about this. I know I have made fun of those who told us that the semiconductors were the new Transports, but their thinking was that there are semiconductors in everything and therefore it is a highly economically sensitive group. So why the lack of selling? It makes no sense.
That changed on Monday. The semis got sold and sold hard. The ratio of the SOX to Nasdaq, which I harped about in January and February since it couldn't make a higher high, finally started to give way on Monday. This is actually good news. Because we can't get to any sort of a decent low until we get cleaned out. This is a step in that direction.
There was a minor positive from Monday's trading, because the number of stocks making new lows did not expand beyond Thursday's reading, even though the S&P is now 100 points lower. At some point the selling will dry up and we should see the drying up in the new lows as they begin to contract. It's only one day and I tend to prefer when that reading shows fewer new lows weeks later, not days, but like I said the selling will need to dry up at some point.
I'm also keeping my eyes on the credit exchange-traded funds. The SPDR Barclays Capital High Yield Bond fund (JNK) , iShares iBoxx High Yield Corp. Bond (HYG) and the iShares IBoxx Investment-Grade Corp. Bond fund (LQD) all closed off their lows. Will it last? That's a big question, but at least it's worth watching.
Finally, the Daily Sentiment Indicator (DSI) for Nasdaq closed at 5. The S&P closed at 4 and the Volatility Index (VIX.X) at 95. We should get at least a one-day rally from these readings. That's all the good news I have for you. I know it's not much, because we still can't get even two consecutive up days. Who knows? Maybe the market will be green for St Patrick's Day!