Calling a Correction Let s take a long look at breadth, the overbought reading, and see why a corrective move is likely soon. Stocks quotes in this article: IWM
The market is now back to an overbought reading.
It s been a great move upward since we got oversold right before Christmas. Having spent December pinned to that 3,700 zone, the Santa Claus rally delivered.
Yet, look at that overbought reading on the Overbought/Oversold Oscillator. That s a lower high, quite a serious lower high.
We discussed breadth quite a bit last week (when don t we?!). But let s review. Monday s decline showed very little selling. Breadth was better in that 55 point decline than it was during the prior week s 8 point decline in the S&P. In other words we had good breadth in that one day whack; I viewed it as a positive. We had good breadth on Tuesday, too. Wednesday breadth started to wane and by Thursday it was a massive under-performer. So, as good as it was M
We re Headed to Oversold by Christmas We appear to be on track to get a short-term oversold condition close to the holiday. Stocks quotes in this article: IWM, QQQ
That was quite a sell-off we saw in the market s final hour of trading on Wednesday. But for the first time in weeks, breadth outperformed the indexes well at least it outperformed the S&P 500, something it did regularly in November and very little of in December.
It wasn t enough to halt the decline in the McClellan Summation Index, but at least it was a welcome change from the drooping and lagging we ve seen so much of in the last few weeks.
Here s What Could Bring Us Higher Breadth was crummy something obvious in investors portfolios and on the indicators but what if this scenario plays out?
Dec 17, 2020 | 06:00 AM EST
You know what I m going to start with don t you? You know, because you can feel it in your portfolio. You can see it in your own stocks. Breadth was crummy on Wednesday. In fact, breadth has been red for four of the last five trading days. We haven t seen that much red on the breadth side since late October.
Yet breadth hasn t been weak enough to roll the McClellan Summation Index over. It has managed to stall it out, though. There is something else that has shifted in the market in the last two weeks. I noted it nearly two weeks ago, when we had what I termed that big speculative move. You know, when uranium stocks were screaming and Home Depot (HD) was attempting a breakdown.