I know, it feels awful when the market is red for five of seven trading days, as it has been. But we sit here with this 2800 support level still in place. In the last two weeks, we rallied from 2800 on the S&P 500 to 2890, and have taken a round trip back to 2800. That's it.
That level and all the other round numbers are still with us. Nasdaq's at 7600. The Russell's 2000 at 1500. The Transports are at 10000. The PHLX Semiconductor Index SOX is at 1300 on the nose.
What's interesting from Tuesday's trading? The Russell 2000 is the only index that didn't give back all of Friday's gains. That also means that breadth didn't give it all back either.
To put some numbers to it, on Friday the S&P was up almost 4 points on the day, and Tuesday it was down just over 23. That leaves us with a net decline of 19 points. Yet breadth was +1030 Friday and -950 Tuesday, leaving us with a modest gain in breadth of +80 issues - with the S&P down hard, though.
We did not officially break to a lower low in the S&P on Tuesday, and maybe it was because the sell off came so late in the day. But the number of stocks making new lows did not expand beyond last Thursday. It might be a different story if we crack under 2800, but for now there was a contraction, not an expansion. Even the 10-day moving average of the number of new lows ticked down modestly.
The 10-day moving average of the equity put/call ratio joined the total put/call ratio's 10-day moving average by moving down.
Also, the Daily Sentiment Index, which ticked over 90 back in April, is now at 31. Under 20, and it's gone too far.
Then there're the bonds. The utilities got crushed, having their worst day since mid-January, and the bonds soared. The DSI for bonds finally pushed to 91. I like to see a move over 90 before I fuss. Now we have a move up there. So let's look at the chart of the yield on the 10-Year Treasury Note.
Since it tagged 2.60% resistance in mid April, it has pretty much been nothing but down for rates. Another tick or two, and they will tag that line that has seen bounces in all of 2019. I think with sentiment as high as it is, and the utes (and other defensive names) turning down on Tuesday, the bonds are in an area that says "enough" for now.
There is plenty of resistance in the 2.38% area, so I would not expect a move much over that, but a rally to resistance is what I'd expect.