I really want to be bullish because I think the
S&P really wants to cross that line -- if for no
other reason than when we get so close it can't help but
do it. But I thought that at the lows, as well you might
recall. At the lows, I wanted to break the line so we
could whoosh down and then go up, but instead we sat
there for days and then just rallied.
And quite frankly, there is no selling, so it does make
sense that they try and rally 'em up through the line.
But today we find yet another sentiment reading that's
bothersome. The put/call ratio for ETFs was once again
under 100%. At first I figured I'd see several instances
of that, but that was not the case.
I had to go back nearly 18 months to find another time we
had back-to-back readings under 100%. Unfortunately, it
fell on the last day of December 2013 and the first
trading day of 2014. It's not as though the market fell
apart right away, but two weeks later it surely had quite
a flush to the downside (circle on the chart). Prior to
that, we did see four such days in a row leading up to
Christmas Day, and the market continued to climb as you
can see (box on the chart).
Prior to that, I had to go all the way back to 2012 when
we saw back-to-back readings in mid-September. It's what
I typically refer to as the Apple (AAPL) high
because that was when Apple hit $700. The S&P, as you can
see, did not fall apart right away, it hung in there for
a month. But then it fell over 100 points.
The good news is that the moving averages of these
various put/call ratios are still falling. Below, you can
see the chart of the 10-day moving average of the
put/call ratio, and it has even made a lower low. It's
tough to say when it might turn back up (turning up is
bearish for the market). My best guess is the middle of
With Friday being options expiration, perhaps they can
finally get the S&P up and over that line and the Russell
to tag that line I drew in last night. But in order to
get some real downside, we need to see some selling.
Salesforce.com (CRM) has actually done a decent job
of consolidating its gap up from earnings in late
February. If it can get up and over $70, that would not
only clear the downtrend line but the two spike highs
that have kept it in check.
The 10-day moving average of the put/call ratio is
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Hertz (HTZ) has saved itself once again, only this
time I might actually like the chart. There is a ton of
resistance as you can see between $21.50 and $22. But
there is also a downtrend line. What if it gets through
the downtrend line? It would be the first time all year,
and therefore we'd have to consider that a positive,
especially since the stock could not break on the
downside. At the very least it should make a try for the
$23 level, where it then runs into more resistance. But
quite frankly, if it makes it over $22, it would be the
first higher high, so it just changes the chart from
negative to positive.
We looked at Chevron (CVX) a few weeks ago when it
gapped down and looked like a cleanout near $101. It has
been a nice run, although there are other oil names with
better runs. I do think this $112 area will be tough to
eat through on the first time up. If it can get through
$112 on the first try and stay over it, that would be
more than impressive. It would set up a much longer-term
target in the mid-$120s, so let's see how it handles that
Right now, CSX (CSX) is trapped between a decent
support uptrend line at $32 and resistance at $33. The
issue is that the spikes both up and down have been so
volatile, I have to believe weak holders were taken out
on both sides of the aisle. Thus, if it went back up and
over $33, we'd have to view these last few days as a
shakeout. If it cannot get over $33 and turns down, then
we'd look at a downside target around $27.
But there's good breadth in an overbought market.
Complacency reigns as market continues to frustrate.
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