What has surprised me most of late? That we are not seeing a quick move to bullishness in the indicators. At least not yet, we're not.
Oh, sure, we see the various investment banks raising their market exposure and we see their targets being lifted. We see people on television, mostly the hosts, much more effusive and thinking the rally is terrific. But we do not see the put/call ratio falling. It is unusual to see it remain so high for so long.
Consider that the December 2018 low saw an equity put/call ratio reading in the 40s a few short days after the low, and so far the lowest reading we've seen for this metric has been 58% on March 26. There has not been one other reading even under 60%. Not yet at least.
If you look at the 10-day moving average of the total put/call ratio you can see it is still heading down. This is the simple 10-day moving average and it still hasn't ticked up. Just looking at the math behind the moving average, I'm not sure it will tick up for another week.
In fact let's take a look at that 2018 low and how this indicator reacted off of it. The first week of January it attempted an uptick; it didn't last. It attempted another one in early February that didn't last, either. The first real uptick was in late February.
Also look how quickly that 2018 low in the market saw this indicator fall under 100%. Within two weeks it was there and three weeks later it had left it behind. Now we are still hovering at 105%.
For about a week now I have been saying that the indicators haven't changed, and they still haven't. We are a little bit short-term overbought, but not intermediate-term overbought. I am finally able to put a time frame on the upcoming short-term overbought reading. Sometime between Friday and Tuesday we should see the market overbought using my Oscillator.
That doesn't mean I expect the market to go up every day between now and then, nor do I expect it will turn down immediately after that. But that is when the upside momentum should begin to wane.
The intermediate-term Oscillator remains not yet overbought, having gotten oversold just over two weeks ago.
The McClellan Summation Index is still rising and has a good cushion. If it rolls over, I will report here.
Will breadth begin to falter? Well it has faltered in the last two trading days, but it is going to take more than two days of mediocre breadth to roll this indicator back over. If we add up the breadth from Monday and Tuesday we get a net positives 20, which is not terribly good when you consider the S&P is up 55 points in those two days. But it hasn't yet had an effect on the indicators. And the indicators will be my guide.