The comment I hear at almost every turn is how resilient the market has been. The bulls think this is terrific. The bears think this is frustrating. I think I would revise the phrase from "the market" to "the S&P," or the major big cap indexes.
It's not a lot, but look at the iShares Russell 2000 Index (IWM) , an exchange-traded fund for the Russell 2000. That looks droopy to my eyes. I mean, it peaked on Nov. 4, barely closing up on the day, and has not been able to get back up there since.
If you want to be positive on the chart, then there is support here, from those two prior peaks and we have not been able to break these lows for two weeks. I'm just not sure I'd call this resilient.
Would you call the transports resilient? Two weeks ago -- when everyone was starry eyed, calling that last-gasp rally a "Dow Theory Buy Signal" -- I wrote that it was not since the transports were still about 5% from their prior high. Now the Transports are down 5% and no one even talks about that. Is that resilient?
The best thing we can say about them here is there is support as they head toward 10,500.
What about breadth? That's the blue line on the chart. It made a minor lower low on Thursday vs. the prior low on Nov. 13. But the S&P is nowhere near the same level it was on Nov. 13. Here, too, I'd call it leakage, not resilient. There is leakage under the surface.
If there was so much resilience, would the 10-day moving average of stocks making new lows on the New York Stock Exchange be at 70, and at a higher high than October? You want to see what resilience and strength look like? Look at that decline from 200 in August to near zero in mid-September. That's resilient and strong.
If there was so much resilience, then why did the McClellan Summation Index, which shows us what the majority of stocks are doing, roll over nearly two weeks ago? To me resilience looks like mid-to-late August, when the Summation Index refused to go down and started up while the Russell 2000 was still trying to find its footing.
Now if you want some good news, then at least for one more day the number of stocks making new lows stopped expanding beyond the prior day. In the case of Nasdaq, more than 10-days ago the number of new lows climbed up over 90, so if it can start showing a contraction, where the daily reading is under 90, then the moving average can peak.
If you want some good news, the McClellan Summation Index now needs a net differential of positive 1,900 advancers minus decliners to halt the current decline. When it gets to the point where it needs positive 2,000 or more, it has stepped a toe into oversold territory. That means one more down day with negative breadth can do it.
Also, the put/call ratio was 121% on Thursday. This is the highest reading since Oct. 3, when it was 137%. Just a handful of days ago this reading was a much more complacent 84%. As I have explained, nothing like a few down days to get folks nervous and this statistic proves that's what is happening.
The 10-day moving average of the put/call ratio has turned up dramatically, but it is not far enough near the top of the range for me to think there is now fear out there. Heck, if there was fear I wouldn't keep hearing about the resiliency.
The S&P had its first three consecutive red days since late September. It hasn't gone to four since early August. But at least the pullback this week has the indicators moving off those extremes we saw.