If you were looking for a market move that would change the narrative from "trading range," which had become so prevalent in recent days, then Monday was just what the market offered for that. Breadth was good -- very good -- and sentiment shifted.
Breadth for the day was the best we've seen in weeks. It was enough to turn the McClellan Summation Index back up, but the cushion isn't very large. A down day or two could send the indicator right back down again.
What strikes me more, though, is when we look at the cumulative advance/decline line, because it is at a lower high right now, despite Monday's terrific breadth. The blue line is lower than last week, which is lower than the week before. Yet the S&P is right back up to those highs.
Then there are the number of stocks making new highs. The New York Stock Exchange has improved, with 45 new highs on Monday. This is the same sort of small improvement we saw for Nasdaq two weeks ago. It's minor, but it is improvement.
But as you can see, Nasdaq's new highs failed to get over that improved reading from earlier last week. That's the problem with the market we're in, when we go up and down and up and down. There's just a lot of two steps forward, two steps back.
But the real change came from the sentiment side of things. I have been noting the put/call ratio's 10- day moving average had pushed its way down to neutral territory, having been so extreme in March. Recall last Wednesday one of the reasons I thought we would rally after that decline was that the total put/call ratio had seen a mad rush to buy puts, as the put/call ratio zoomed up to 117%.
Well Monday changed that, as the total put/call ratio dipped to 72%, which is the lowest reading since early February. One day does not make a market, so I wouldn't fuss too much over that reading (had it been under 70% I would fuss a lot more), but look at the 10-day moving average. It is on the verge of falling from neutral to "too much." If we get any more readings this low, it will become extreme on the side that says folks have gotten too bullish.
That means I think the roller coaster continues.