At least we didn't see breadth negative on Tuesday. It wasn't exactly a barn burner when it comes to breadth, but it was positive, which is a welcome change. In fact, breadth has been positive for three of the last four trading days. That is the longest such streak in three weeks. It has even managed to lift the Overbought/Oversold Oscillator off its lows. I would still consider the oscillator --which really reflects the down-and-outers -- oversold for a few more days. After that it heads into overbought territory.
For weeks now I have been showing you the rising number of stocks making new lows, especially on Nasdaq. We have looked at the 10-day moving average, which is now rivaling the May reading. If you want to be bullish, this has got to turn south.
I decided that perhaps in this market I should give it more leeway and so I looked at the 20-day moving average of stocks making new lows, and, low and behold, it too is rising, and has been since it turned back up in early August. The most curious part is that if we step back, this shows the number of stocks making new lows has been rising since late June. That sharp downturn in July that we see on the 10-day moving average is not evident, except for one week in early August. These indicators should be heading down, not up, in a market. This is where the improvement should come and so far it hasn't.
But then take a look at the Nasdaq McClellan Summation Index using volume. It took turned south in July and has continued on its lower path since then. It had a minor attempt at a rally in early August that failed. It will take a net differential of up minus down volume on Nasdaq of positive 1.4 billion shares to halt the decline and more to lift it up. To put that in perspective, Tuesday's rally gave us a net of positive 530 million shares.
I will end by noting that the computerized chart of the Invesco QQQ (QQQ) in their channel shows the first touch of the upper line after Tuesday's rally. The Daily Sentiment Index (DSI) for Nasdaq is at 88, so presumably any further upside should take the DSI to 90 or more.
Finally, I want to highlight the chart of the Dollar Index again, as 94 remains solid resistance. But there was a reversal on Tuesday that so little attention was given to. I still think the dollar is trying to form a bottom of sorts. I would give up if it smashes through that lower line, which this week comes in around 91.50.
Note: My next column will be Tuesday, Sept. 8.