We seem to have a similar situation to the peak in late April on our hands, albeit with some twists.
Look at the peak in late April (blue arrow), when the Bank Index appeared to be getting going only to drop 20% in a few weeks. This time, the Bank Index peaked in early June, and is down 10% in two weeks.
Or what about the Transports which, like the banks, appeared to be getting going in late April and promptly fell just over 10%? Two weeks ago, the Transports were all the rage -- you do remember our non-stop chatter here about American Airlines (AAL) , don't you? And here, once again, the Transports are down 10%.
If you go through the "reopening" stocks, you will find a common pattern like this. There are a few differences. For example, the drugs. The health care sector fund (XLV) had just come off a great run in late April. It is the same place now it was then, having moved sideways for nearly two months. It has not enjoyed upside or downside since then.
This is why we are seeing the same action in the McClellan Summation Index that we saw in early to mid-May. In May, it resolved itself to the upside. Time will tell if this time it does it, as well. What we do know is that Monday's 20 point rally in the S&P netted fewer than positive 200 in net breadth (advancers minus decliners), which is pretty pathetic.
So far, most of the selling came on June 11, the big down day and since then it's just been a big churn, as if folks have lost interest in anything but the work from home stocks.
To go back to the late April peak comparison on sentiment though, there is a big difference. The Daily Sentiment Index (DSI) for Nasdaq hovered around 60 back then. Now it stands at 85. One or two more up days and it ought to get back over 90, and, as you might recall from two weeks ago, over 90 is not a good time to buy.
In late April the 10-day moving average of the put/call ratio was hovering in the 95%-100% area. Now it is near 80% and heading up not down.
In late April, the Investor's Intelligence bears had just ticked under 30% for the first time. Now they are at 18%, where they were before the March decline.
In other words, there is more complacency now than there was two months ago.
The next few days, as we head into month's and quarter's end, will be a good test for the market since the Oscillators have come down quite far there is a chance they choose to rally the "have nots" of the past two weeks. If they don't there is a message in that.