The question of the day seems to be if this is what it was like in 1999-2000. The truth is it was worse. This divergence, where Nasdaq goes up every day and everything else goes down has been going on for a few weeks. In 1999-2000 it went on for nearly two years.
We may as well begin with stocks making new lows since that seems to be the statistic that has captured the most attention. For the first time in well over a week the number of stocks making new lows on Nasdaq contracted on Friday. Thursday's reading of 409 will, for now, stand as the peak reading. If it is eclipsed, we'll wait and see but Friday's reading of 322 new lows for Nasdaq showed a contraction.
The New York Stock Exchange however saw a small uptick, so there are 112 new lows there. The big picture for this statistic is that there simply should not be that many stocks making new lows or on the verge of making new lows - regardless of the time of the year - when the indexes are at new highs, which they are. It just doesn't speak of a healthy market. But at least we've seen a contraction for Nasdaq's lows on Friday.
Then there is the oversold condition. My own Oscillator is oversold. If the market is down on Monday it will get more oversold. In other words despite what it looks like on the chart the math behind the Oscillator says it's oversold but not extreme.
We already know breadth is terrible. And the terrible breadth has turned the McClellan Summation Index lower. It now requires a net differential of plus-3,300 advancers minus decliners on the NYSE to halt the slide in the indicator. At plus-2,000, it has stepped a toe into oversold; at plus-4,000 it has gotten extreme. So, you can see how a decline on Monday would get this indicator to an extreme oversold reading.
But where's the fear? Is everyone afraid to be bearish because of the time of the year? Because you know we 'always get a rally in December'? Perhaps memories are short but the fourth quarter of 2018 wasn't exactly a party for the bulls.
But I digress. We already know the Investors Intelligence bulls are at 57%, which is too high. The American Association of Individual Investors saw the bulls come down but at 39% they are also high. The National Association of Active Investment Managers have their exposure at 102. That is a far cry from even a reading at 90, let alone the 55 we saw in early October.
In addition the put/call ratios haven't budged. We have not seen the equity put/call ratio over 0.5 since Oct. 27. Let me remind you the Russell 2000 is down 5% since Nov. 8, and there is still no put buying.
About the only sign we see that sentiment got a little bit antsy last week was my Twitter Poll from the weekend showed 48% looking for upside while 52% are looking for downside for the S&P 500 this week. The last time folks were skewed to the negative side was mid-September when they were at 41% to upside and 59% to the downside. For the record, the S&P fell that week anyway.