Each day when we rally or when we decline I look for indicators that have shifted. For example, last week when we sold off I looked for indicators that might confirm the oversold rally I thought was in the cards, or if my call was going to be dead wrong and would not materialize.
Naturally, when we rallied on Monday I looked for reasons the rally might continue or reasons it might stall out and head back down. In terms of the latter, let me point out that breadth was rather crummy on Monday.
With the S&P up 40 points and net breadth +840 it's difficult to put breadth on the positive side of the ledger. Heck, last Wednesday the S&P was up a mere 8 points and breadth was better at +1,450. I'll admit breadth was better Monday than it was 10 days ago (November 15) when the S&P was up 28 and breadth was +420. But this is what I mean when I say there is no life on the upside. No interest in buying.
Yet, the positive breadth did manage to take the McClellan Summation Index from the minor downturn it had a week or so again to heading back up. That was about the only change in the indicators from Monday's action.
That leaves us still oversold (of course, not as oversold as we were late last week) with sentiment still sour, although not as sour as we were last week.
I do want to share one stock chart with you. It's a stock no one seems to notice or care about anymore, although that might be because its founder was ousted under difficult circumstances. It's the chart of Wynn Resorts (WYNN) and I think it answers the question that gets posed to me: what would it take for this market to improve in a big way?
In many ways WYNN is the poster child for what ails China. Take a look at the chart dating back to the beginning of 2018. It was never in an uptrend this year but in June it started down in earnest and has been steadily falling ever since. It did not make a lower low on poor earnings earlier in the month and has clawed its way back to where it dropped from. Even the recent decline didn't take the stock back under the early November low, let alone the late October low.
Now let's zoom in on the chart dating back to August. Monday saw it cross the downtrend line. That's quite a change since I don't have many charts that have done that. It still has not made a higher high since the spring but if you want to know what it takes to improve charts and make a rally look like there is more buying interest than we've seen so far, this is how it begins, by crossing downtrend lines.
The next step would be that pullbacks simply retest the line instead of violating it. Alternatively, getting up and over $115 would be a first step because it would be the first higher high the stock has seen all year.