There are the indexes and there are stocks.
For the last month or so the big-cap indexes have been just fine, but under the hood -- where stocks are -- it hasn't been so great. But as we saw the other day, when we looked at the charts of SPDR S&P Biotech fund (XBI) -- an exchange-traded fund for the biotechs -- and Invesco Solar ETF (TAN) , for the solar stocks, as much as they were down, they did not break.
Even in the reopening stocks, the banks had stalled, energy had stalled, industrials had stalled. Tuesday those three groups were hit pretty good. The FANG stocks have hung in there, though. They saw little selling on Monday or Tuesday. On Wednesday, there was no buying in them, either. That's what is under the hood.
Then, Wednesday comes along and all those down-and-out, speculative stocks got a lift. Biotechs rallied. Solar and electric vehicle stocks rallied. Pot stocks rallied. Heck, even special purpose acquisition companies -- or SPACs -- rallied. And when all those speculative stocks rally, breadth is excellent. It was the best breadth day we've seen since April 1.
But more than that, for weeks I have been complaining that up days have seen so little volume on the upside; that changed on Wednesday. The New York Stock Exchange saw 87% of the volume on the upside. Nasdaq saw 89% on the upside. For Nasdaq, that is the largest percentage since Jan. 4. And that was the big change in the market on Wednesday.
Yet, none of the indicators changed. There would have to be more than just one day of those sort of statistics to get the indicators to change.
For example, the good news is that the number of stocks making new lows on Nasdaq was the lowest since April 15, but 89 is still high for a market at its highs. The number of stocks making new highs -- keep in mind the indexes are at their highs -- was 101 for Nasdaq, which is pathetic.
The NYSE had 41 new lows and 228 new highs. Here's how 228 new highs compares to just a week or two ago, which were still fewer than we saw in March. In other words, the action we saw on Wednesday will need a lot more follow-through because, right now it wasn't evident in the statistics.
On the sentiment front, we had seen the put/call ratio for exchange-traded funds so low, as we headed into this week, because for April we had only seen one reading over 1.0. That is until this week. The two down days brought us our first consecutive readings over 1.0, since late March. Now it's back down, which means Wednesday brought the giddiness right back.
The Daily Sentiment Index (DSI), which was 90 for the S&P and 91 for Nasdaq last week, had backed off with the pullback and now they reside at 79 and 78, respectively. So there is a little room to move up for them, but another day or two of rallying and they will be right back near the danger zone.
I still think we will see some more pullback in the days ahead.