• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim Cramer
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Daily Swing Trade Archive
    • Income Seeker
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing

The Market May Be Developing a 'Wall of Worry'

I have not minded this Wall of Worry for the last several weeks because the intermediate-term indicators were not overbought.
By HELENE MEISLER
Feb 07, 2019 | 06:00 AM EST

When the market has been on a rapid rise such as it has these last six or seven weeks -- and it has done so from a point where folks were extremely bearish at the lows -- we tend to see a Wall of Worry develop. Having been burned buying the dips/lows in late October and late November and being shaken out the desire to get beaten up again is low.

I have not minded this Wall of Worry for the last several weeks because the intermediate-term indicators were not overbought. However after the close on Thursday, most of these indicators will step into overbought territory. I had thought if we could rally Wednesday and/or Thursday and get over the 200-day moving average of the S&P we'd see sentiment get a bit more complacent. But Wednesday's action did not help that because we chopped with a downward bias.

You already know about the intermediate-term Overbought/Oversold Oscillator and how it will reach its maximum overbought reading after the close Thursday. Now let's move to the Volume Indicator. It is now at 59%. It has a bit more room to move and might make it to 60% or 61% in the next few days but suffice it to say it is now in overbought territory. So I looked back to see the last time it was this high.

That was November 2014 (blue arrow on the S&P chart). What I find fascinating is that we had a V bottom then too. I also find it fascinating because I have shown this chart (see Monday morning's column) as a possible scenario for what might happen this time, when we rallied straight up from a low, made a higher high and then 10 months later we were right back at the low again.

What is also interesting is that after a torrid rise for six straight weeks the market did not turn down. It chopped about, with one sharp down day and right back up. It did that for two weeks. And then it came down harder a few weeks later.

Now let's look at the VIX from then since my call has been we should expect a higher level of volatility in the next few weeks. The shape of the VIX looks similar then as it does now. The big spike and the subsequent decline and somewhere around week 4 the little spike up and another retreat (point A on the chart). And then in 2014 it made a lower low, had another small pop in late November before coming down one last time. It has made a lower low now as well.

I am not yet sure about the big drop thereafter because we would need some of the breadth indicators to roll over and they haven't done so. The McClellan Summation Index still requires a net differential of -2,200 advancers minus decliners to halt its rise which is a decent cushion. Yet two days ago it needed a net differential of -3,500 so one mildly negative breadth day took a lot of the plump out of that cushion. If breadth's great performance slows, these indicators will roll over.

I am still looking for a rise in volatility.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.
TAGS: Investing |

More from Investing

HP Enterprise Is Still Finding it Hard to Grow Revenue - Tech Check

Eric Jhonsa
Feb 21, 2019 7:38 PM EST

The IT hardware giant beat EPS estimates with the help of margin growth and buybacks. But revenue fell short amid lower server and IT services sales.

I Like the Way Individual Charts Are Developing

James "Rev Shark" DePorre
Feb 21, 2019 4:36 PM EST

The weakness is actually a positive from a technical standpoint, but there is no rush to act at this point.

Here's How to Trade Inseego

Timothy Collins
Feb 21, 2019 3:40 PM EST

Inseego is an under-the-radar 5G play that is garnering a lot of attention.

Boston Beer Is Not a Poor Man's Stock

Dave Butler
Feb 21, 2019 3:10 PM EST

Boston Beer is an expensive stock despite the company's solid fourth-quarter earnings.

Random Gleanings: Nike, Tesla, Boeing and Wells Fargo

Jim Collins
Feb 21, 2019 2:54 PM EST

One wonders where Nike's cool factor will come from.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 11:48 AM EST BOB LANG

    Making a Case for Microsoft and Snap

    Mr Softy has long been a laggard and late to the p...
  • 11:27 AM EST BOB LANG

    Added Some Dexcom

    This company reports tonight, the chart/technicals...
  • 10:08 AM EST KEVIN CURRAN

    Nike Options Action Spikes

    Nike options volume is surging as speculators pi...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2019 TheStreet, Inc., 14 Wall Street, 15th Fl, NY, NY 10005

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login