Just about a week ago I did one of these exercises for you where I cited all the good breadth statistics and matched them to the S&P, noting how much better breadth was than the S&P. We saw the first slippage of that outperformance on Tuesday.
We saw net breadth on the NYSE down by 775 on Monday and up by 785 on Tuesday. That's a net gain of 10. So we will call it basically flat. In those two days the S&P is up 14 points. It is only one day but that is the first sign of that underlying strength is waning so we'll watch it.
Remember that breadth has to be weak for more than one day to really have an effect on the indicators but I thought it was worth noting since it is the first change we've seen. Quite frankly I thought Nasdaq would look different since Tuesday's rally was so concentrated in tech stocks and it was not. For example if we use net volume for Nasdaq Monday saw a net loss of 720 million shares while Tuesday gained 880 million shares. That's a net gain of 160 million shares with Nasdaq having gained just over 60 points. A week ago that was not the case. A rally with wide breadth is better than one with narrow breadth.
Then there are the number of stocks making new highs. A week ago Nasdaq had 35 new highs. On Tuesday there were 26. Not the direction you want to see as we plow into resistance.
And what of sentiment? On a one-day basis, the equity put/call ratio jumped up to 70% which would indicate there is no complacency in the market and that anxiety continues. On the other hand the 10-day moving average has begun to rise which it tends to do when the market is overbought and needs a pullback. So there is something for everyone here: the moving average says we should pullback but the one day reading says too many bears out there.
Then we have the Investors Intelligence readings. Was it just two weeks ago there were more bears than bulls? Since obviously price changes minds we now find that the bulls number 42% up from 29% two weeks ago. They are not as high as they were in early December (46%) but they have certainly shifted.
However here too we can look at the Bulls divided by Bears and while it is no longer under 1 it is nowhere near extreme since it is not even over 2 yet.
Where does this leave us? In the same place we've been. I think a pullback in the market would lead to another rally.