The other day I was out for a walk and saw a sign in front of a house. It wasn't one of these lawn signs, but rather one that looks like the type that are put outside buildings that are on the National Historic Register. It appeared like a plaque that says what the historical significance of that building is.
So, I wandered over to get a closer look. And the sign said: "On this date in 1859 nothing happened."
I found myself chuckling out loud. Yet, as I watched the market trade on Tuesday, that sign came to mind over and over again, because during the trading day, pretty much, nothing happened.
With the exception of Nasdaq's nearly 50-point decline, the other major indexes finished the day unchanged. Usually on a day of unchanged indexes, under the surface breadth will have done something. But that was not the case on Tuesday. Breadth was flat. Net volume was flat as a pancake.
OK, maybe stocks making new highs or new lows said something, but nope. New highs are still contracting and new lows are sitting there. Oh, Nasdaq had a few more new lows Tuesday than Monday, but nothing extreme. It truly was a day of nothing.
This is why I find myself curious about sentiment. As noted here earlier this week, the total put/call ratio plunged to .65, a reading not seen since just prior to the GameStop (GME) fiasco in January. That was somewhat understandable, since for the first time since then all the speculative names got a boost.
But on Tuesday's do-nothing day, the call buyers were at it again, with the put/call ratio at .69. That's two days of relatively low readings for the total.
Then there is the put/call ratio for exchange-traded funds. On Monday, it plunged to .61. The last time it was that low was Aug. 25, which you might recall was a week before the September pullback started. To add to this, the Daily Sentiment Index (DSI,) which had moved up to nearly 20 for the Volatility Index is now back at 12. As a reminder, a reading in the single digits is telling us we're due for a bout of volatility.
Has the fact that so many speculative stocks lifted up from their depths really changed sentiment that drastically? It sure seems that way.
But did those flat statistics change any of the indicators?
Well, the McClellan Summation Index is still rising. For the New York Stock Exchange, it now requires a net differential of negative 600 advancers minus decliners to roll it back down. Considering we just had some of the strongest breadth readings in months over the last few days, the cushion ought to be more. But for now, it is up.
The only real movement on Tuesday came from the bonds. What struck me was that a move like that in interest rates a month ago would have caused growth stocks to take it on the chin and Tuesday they meandered down, with no oomph.
The Fed will opine on Wednesday and if that small downtrend line is crossed, I would expect the volatility in stocks to pick up.