The chop continues.
Each Saturday, I post a Twitter poll, asking folks what they think the next 100 point move in the S&P 500 will be. For the last several weeks we have barely been able to get a one hundred point move in the S&P before I do the poll again. Remember, it has to be a move from the prior Friday's close.
The results are in and folks are leaning bullish for the first time in 7 weeks!
And what a turnout! Highest ever. You guys are awesome. Thank you! pic.twitter.com/don12avLrx
— Helene Meisler (@hmeisler) March 4, 2023
That's what happens when the S&P is in a trading range that is roughly 150 points for approximately three weeks. And when the range gets so narrow like that, the indicators don't move much. Just take a look at the Overbought/Oversold Oscillator for Nasdaq. Consider that tech has been the hot group and that Oscillator has spent the last few weeks churning, much the same way it did so in April of last year.
So what we get is folks feel good on days like last Friday, when the market rallies hard. But then we get a day like Tuesday, when the market gives it all back and folks feel bearish again. Then we stabilize as we did on Wednesday and folks feel as though that's a good thing. When in the end there has been a lot of up and down, chewing both bulls and bears to bits.
The Investors Intelligence survey is not like the American Association of Individual Investor
survey. The AAII survey is not as scientific as II, in that with II, there is a set number of newsletter writers who have subscribers and it is their opinion about the market that is surveyed. AAII is a bit more random. The number of voters vary from week to week and they tend to jump around like day traders.
The II poll tends to reflect the action through the prior Friday. So naturally the bulls gained, to 45% after being down last week.
But it was the bears that really surprised me. They fell to 24.7% which is the lowest number for the bears since January 2022.
I expect the AAII survey to show more bearishness when it is released on Thursday.
As for the indicators, the number of stocks making new lows increased on both Nasdaq and the New York Stock Exchange on Wednesday. Nasdaq's new lows are now pushing up against 200, which is the highest level since late December when Nasdaq was nearly one thousand points lower.
The Hi-Lo Indicator notched down to .40. The only real movement was in the Volume Indicator, which is now just a bit over 47%; that is just over the top of the oversold level.
I want to conclude by noting that the put/call ratio for the VIX sunk to .12 on Tuesday. That is really low. I had to go all the way back to 2019 to find another time we'd had such a low reading. This low reading signals that the number of calls being bought on the VIX relative to puts has been swamped. Typically VIX options traders are smart money and you don't want to fade them. When I went back to 2019 and discovered there were four such low readings in the second half of the year I found two were spot on, by buying calls on the VIX. Two were misses.
I don't know what the Daily Sentiment Index for the VIX was in 2019, but I know that it now resides at 20, so while I don't have a strong view on the chop-fest we've been in, I do know it will be hard to get comfortable with whatever move we get until my indicators set up better.
