You want to know the most bullish thing that happened in the market on Wednesday?
It wasn't the big comeback from overnight futures. In fact, if you only pay attention to regular trading hours, there was nothing spectacular at all -- we were down nine handles on Tuesday and up 15 on Wednesday. It wasn't that breadth was good, either, it wasn't. It wasn't that new highs expanded -- they didn't.
No, it was that everyone now sees how overbought the market is. It is that everyone now sees how complacent sentiment is.
But let's talk about the statistics. We'll begin with breadth. It was never that good during the rally on Wednesday, but at the end of the day it ended with positive 540 issues on the New York Stock Exchange. And that means it wasn't enough to get the McClellan Summation Index turning back up.
It is still too soon to see any sort of rollover in this indicator, without a high-powered magnifying glass. One more up day with decent breadth would correct the fact that the indicator stalled out this week. But if the market heads south again -- remember we've been alternating up and down days in 2020 -- it could begin to roll over.
It is unusual for the Russell 2000 to roll over before the indicator does -- usually the indicator rolls over first -- but that's what happened in July. Then the Russell had that surge into the end of the month while the indicator did not. It's something to watch.
The oddest part of breadth was that up-and-down volume was practically the same. So whatever buying there was seemed to be offset by selling.
The S&P 500 did not make a new closing high, but Nasdaq did, and the number of stocks making new highs did get over 200, barely. But the number remains far below the readings from a month ago.
Also recall that Nasdaq's PHLX Semiconductor Sector index (SOX) had that up day earlier this week, but it did not play along on Wednesday, which means the ratio of the SOX to Nasdaq is still on my radar screen.
On the sentiment front, the anecdotal note above is just that: Anecdotal. In terms of data, the equity put/call ratio was a very low 44% on Tuesday, which means the various moving average lines remain low. This means there's too much complacency.
The Investor's Intelligence Bulls did back off to 55%. I guess Friday's action scared some newsletter writers. But once again, the Daily Sentiment Index (DSI) for the Volatility Index (VIX.X) finds itself in the single digits. Since Thanksgiving, we have seen this two other times and each time the VIX has had itself a short-term spike. The DSI for the VIX ended the day at nine.
If the market could have a proper correction, we could reset the indicators. But thus far that seems too difficult to do.