A Lack of Upside Leadership

We have two things to deal with now: The fact that ever since the Federal Reserve's announcement one week ago everyone is wildly bullish, and the fact that the Dow Jones Industrial Average hasn't had an up day since everyone jumped into the bullish pool.

Oddly enough no one seems all that concerned that we have managed to give back just about the entire Fed rally. I know this because even after Monday the put/call ratios remain way too bullish for my taste. With the equity put/call ratio at 60%, I believe folks are not betting on a down move but an up move.

Sentiment is always a concern for me in the market. I cannot help myself. And these figures do not bode well for the year-end rally I envisioned.

I continue to have my eye on the bank ratio. It has not yet broken down, but I remain vigilant that it is on the verge.

The bank index itself is sitting right on the verge as well. A breakdown in the bank index would make this entire move over the past month look like a bear market "correction" as if we're just going to continue the trend lower.

What does bode well is that the 30-day moving average of the advance/decline line is oversold. What bodes well is that we are heading toward a minor (very minor) oversold reading. What does bode well is that the volume on the downside has been relatively light.

I have seen several folks reference the fact that there is no leadership in the market. I would counter that just a bit by saying there is no upside leadership in the market. If that bank index breaks to the downside it would seem to me that the banks are leading, but just not to the upside.

You might have noticed that we seem to have lost the oils as leadership as well. It never ceased to amaze me how the commodity went down on a daily basis and Exxon Mobil (XOM - commentary - Cramer's Take) was one of the best performing Dow stocks. And now it too has broken.

As far as oil the commodity goes, I'm sure we all recall when it was so relentless on the upside and most of us didn't believe there was a real reason to see oil rise like that, yet it did day after day. And now it goes down every single day. And there are those who have a gazillion reasons why, such as the world is awash in oil. That's great. Those are probably the same folks who told us last spring how with China and India's usage growing exponentially we'd never see oil under a $100 again.

My point is they look for reasons as to why oil is up or down. I look at the chart and I say since September every time oil has come down to this line it has bounced. If oil gets down to this line I would expect a bounce. But what if oil manages to bounce before it gets to that line? Well, if it does that, then something has changed in the pattern and I'd say if it does that we've probably seen the end of the relentless downside move for a while.

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Know What You Own: Meisler mentioned Exxon Mobil. Related stocks are Chevron (CVX - commentary - Cramer's Take), BP (BP - commentary - Cramer's Take), Marathon Oil (MRO - commentary - Cramer's Take), ConocoPhillips (COP - commentary - Cramer's Take), Murphy Oil (MUR - commentary - Cramer's Take) and Royal Dutch Shell (RDS.A - commentary - Cramer's Take).

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At the time of publication, Meisler had no positions in any stocks mentioned, although holdings can change at any time.

Helene Meisler writes a daily technical analysis column and TheStreet.com Top Stocks. For more information, click here. Meisler trained at several Wall Street firms, including Goldman Sachs and SG Cowen, and has worked with the equity trading department at Cargill. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. She appreciates your feedback; click here to send her an email.