I feel as though the Market Gods heard my complaints and in an effort to placate me -- or was it to shut me up? -- finally decided to rally my down-and-outers. If that should last longer than a day or two, we'll probably be back to hearing the never ending question: Is this finally the turn from growth to value?
I always prefer when the market has good breadth. I prefer when stocks with bases lift themselves up from the ashes. Do you know there was a time when Nvidia (NVDA) was a down-and-out stock? Here's the chart dating back to 2012. Look at how it developed that base over time. That, to me, is a chart I can like. So, when I harp away about the down-and-outers, know that there was a time many of today's growth stocks were down-and-outers at some point.
Will I know when we see the exact turn? I can tell you right now I will only know it in hindsight. But I do know that today's so called value stocks are developing bases that are missing in today's growth stocks.
Now when you look at the Overbought/Oversold Oscillator you will probably ask yourself, where is Monday's rally on the chart? That's the issue: When you replace a high breadth reading with an equally high breadth reading, you make no progress. It still leaves the Oscillator heading toward an oversold condition.
But let's talk about Nasdaq. Yes, again. I have said how narrow things have become there and Monday that continued. Net volume (up minus down volume) was positive 450 million shares. Friday it was negative 575 million shares, which means Nasdaq is up over 100 points in two days and net volume is still negative.
Then there are the number of stocks making new highs, which is still far short of the recent peak readings as well as earlier this year.
New lows have not contracted, despite the rally. The increase to 45 new lows continues to show expansion. Again, this needs to stop expanding and to start contracting. Often a correction is the antidote to that, but we now know the market has repealed corrections. We will go up forever and a day!
Here's something else interesting. Nasdaq has been pushing higher for weeks and the Daily Sentiment Index (DSI) has hovered in the low to mid-80s. On Monday it tagged 90 for the first time since late July. The S&P is still at 85, so there is some room to run there, but my point is the Nasdaq statistics are not great and now the DSI is 90. Readings over 90 tend to lead to corrections/pullbacks. Oh wait, I forgot, corrections and pullbacks have been eliminated, only group rotation is allowed.