Stocks spent a lot of time spinning their wheels on Monday. And that means once again I will report that the indicators haven't changed.
You can see the 30-day moving average of the advance/decline line (intermediate-term Oscillator) inched closer to an overbought condition. It is now reaching up to where it has gotten overbought for much of the last year.
Breadth, despite that the Russell 2000, managed to not lead the way on the downside and actually close the day a little bit in the green, was negative most of the day. That means you can see it is still lower than it was in early April (blue line) whereas the S&P is fractionally over its early April level. You don't even need to squint to see breadth is much lower than early February as well.
The one place we had some decent movement was in the bonds and interest rates. You can see that this 3.6% level on the yield on the 10 year has been a lid for the last six weeks. Should we crack over it I would expect we get a little hysteria in bond land. If I had to guess a move over 3.6% would play out something like I have drawn in (brown) with a quick pullback not long after the breakout followed by a push up to that green line (around 3.9%). But first we need to see a breakout.
Then there is the U.S. dollar. How is it I have not heard a word on the dollar vs. the yen? That is quite a move in the last two days and silence is all we hear. The number 1.38 is a tough resistance level, so maybe it gets turned back on the first visit. But, if it gets through I am certain of one thing: The chatter will be non-stop. The last time it had a big move over 1.38 was last fall.
While we're on the subject of the dollar, I think it works its way upward. I have thought that for a while and quite frankly it has lacked life and the Dollar Index hasn't done much of anything, but I did see that the Commitment of Traders report shows folks short the most contracts in the dollar since June of 2021. I am no expert on the COT report, nor on currencies, but I can see a chart and note that the dollar had quite a rally that began around that time. I lean bullish on the buck.
Finally the Daily Sentiment Index (DSI) for the VIX fell to 16. It's still possible stocks rally again this week as we try and work off that short-term oversold reading, but once the DSI for the VIX gets this low I am inclined to think we get a bout of volatility in the coming weeks.