Window for a Rally Keeps Opening

We've now had five down days in a row on the Dow Jones Industrial Average. Maybe it doesn't seem like much to you because it's been in dribs and drabs, but in the past year or so, since the S&P 500 made its high, we've only had five down days in a row three other times. So you can see it is a rare event.

We had seven down days in early October. We had five down days in a row in early January last year, and then we had five down days in a row off the highs in the S&P in October 2007. I'd say we're due for an up day either Wednesday or Friday.

But the problems remain. The International Securities Exchange equity call/put ratio was 173% Tuesday. Typically a reading over 175% is where I'd make a huge fuss on the bear side. So let's say it got "saved," but let's also acknowledge Tuesday's action didn't do a lot to turn folks bearish.

Over on the Chicago Board Options Exchange, the equity put/call ratio was 56%. Readings in the 50s are bearish not bullish. So you can see sentiment remains a problem for me.

Concerning me also on the sentiment front is the Investors Intelligence readings from this week. If we add the bulls and corrections together we get the "bullish" sentiment at its highest level since mid- to late-August. You might recall that was not a good time to be bullish.

And since it's been at least a few days since I have complained about the utilities I need to remind you to keep them on your radar screen. No, they haven't yet broken through 340, and maybe they will just frustrate me and swing back and forth here. But they made their lows in October and were actually bullish by not making a lower low in November and now they have essentially gone nowhere.

A break below 340 will be very concerning for the markets.

In the meantime we are not really oversold in the market. The 30-day moving average, as shown in Tuesday's column, is oversold, but the shorter-term oscillator is not yet oversold. At this point it appears it will not be oversold enough for any sort of a decent rally (i.e., lasting more than a day or two) until late next week as we head into the early part of the new year.

So I'm clear on this: We are no longer overbought. It's just that we're not oversold. And since I think it's doubtful we'll have any sort of a record of down days on the DJIA (like more than the seven we saw in early October) I do think we're heading toward an up day. But without the help of the oscillator being oversold we'd probably rally a day or two and then come back down again.

One thing about this bear market is that it keeps opening the window for a rally and then it seems to squander it. All I can think of is the button I have from Fraser Publishing from years ago that says, "Cash to burn will find a match."

I am taking a few days off so I'd like to wish everyone a very Happy Holiday season. My next column will be Monday.

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Know What You Own: Meisler mentioned utilities. Some utility companies are Duke Energy (DUK - commentary - Cramer's Take), NiSource (NI - commentary - Cramer's Take), Exelon (EXC - commentary - Cramer's Take), American Electric Power (AEP - commentary - Cramer's Take), Southern (SO - commentary - Cramer's Take), Williams (WMB - commentary - Cramer's Take) and FirstEnergy (FE - 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.