We looked at the small caps Monday, and how they have gone nowhere in over a year. The Bank Index is similar. But do you realize that the semiconductors are trading the same place they were when the China trade deal fell apart in late April? That's almost six months of nothing.
What's more is that I keep hearing that it's the software sector, despite the summer swoon, that has been the place to be. Look at iShares
North American Tech-Software (IGV) , an exchange-traded fund for software. It is the same place it was in February and March. So, basically, if you didn't buy them off the December low, you're flat. So much for the place to be.
The consumer staples, using the Consumer Staples Select Sector SPDR Fund (XLP) , appear to be in an uptrend -- and they are. But here, too, there has been very little progress since July. So this group was terrific in the first half of the year, but since then, it too has been a chop-fest.
I could have noted the utilities have been up, as have the home builders. But how many other groups can you think of that have rallied up and out of their range?
Perhaps that's the problem, when the market doesn't sell off enough to get truly oversold, just modestly oversold. Or it doesn't sell off enough to get enough folks bearish. Some would say that folks got bearish last week and the put/call ratio soaring over 125% says that is correct, but did it feel like all hope was gone? It did not feel that way to me. That's the situation as I saw it last week and still see it.
Although there is still the chance that we see the market sell off and we see positive divergences. That would require retesting the August lows. But if we did that, there is a chance that we'd see fewer stocks making new lows. There is a chance that sentiment would be truly bearish. There is a chance that the Volatility Index would get jumpy.
There is even a chance that the intermediate-term indicators can get back to an oversold condition. They are not oversold now. The Volume Indicator, which gets oversold when it is in the low 40s, is hovering around 50% now. The 30-day moving average of the advance/decline line is not oversold.
The Hi-Lo Indicator is the closest to getting oversold since it currently sits at 25% and under 20% it dips a toe into an oversold condition.
So that's the condition the market is in. We didn't get folks bearish enough and we didn't get oversold enough to have any sort of a durable low last week. So we get this choppy action. It's like we're stuck in the mud.