Positives Outweigh the Negatives

Editor's note: Helene Meisler will explain what opportunities the technicals are pointing to in '09 at TheStreet.com Investment Conference on Saturday, Oct. 25. Click for details.

When I first got into this business in the early 1980s, the great new fabulous bull market was just getting started. So folks were still chatting about the "Nifty Fifty" of the early 1970s. I was a bit too young to remember the market from the early 1970s, but I recall a name that was used to describe those Nifty Fifty shares: one-decision stocks.

It basically meant there was only one decision to be made when it came to those names: Which one should I buy today? I thought of this Wednesday as this market has become a one-decision market: Which stocks shall I sell today? Only this time there is not a Nifty Fifty that keeps it confined to one group, but rather there is a sort of group rotation on what gets slaughtered the most on any given day.

What we know is that the index put/call ratio is now six-for-six in its calls this year, which is truly amazing that any one indicator can work so well. A low ratio leads to a market whack.

However, each night as I do my statistics I jot down on my steno pad the positives on the left side and the negatives on the right. I actually do this all day long as I see, hear and read market stuff. I am sitting here shocked to tell you that the left side of my pad (positives) has a longer list than the right side. As the day wore on Wednesday, I felt there was no way this could be the case.

Some of the points on the list include the cumulative advance/decline line not making a lower low vs. the S&P's lower closing low. That one really surprised me. Then we have the new lows, which while they grew were far fewer than there were at the Oct. 10 lows.

Another indicator that surprised me was the McClellan Summation index. I thought for sure it would roll right back over and it didn't. Now if Thursday is like Wednesday, the index probably will roll back over. But it hung in there Wednesday.

In addition, the Investors Intelligence readings at 22% bulls were pretty surprising to me. We had quite an up week last week and there was no change. I find it hard to believe none of these folks budged an inch on their view of the market. But maybe that shows us how pervasive the gloom is.

Also on the sentiment front I have a chart I don't believe I have ever shown here before. This is a very long-term moving average of the put/call ratio, or at least long term to me at 60 days. You will notice that when this moving average gets up over 105% it has tended to correlate with a low in the market, or at least a tradable rally.

It never even got close to this 105% level at the July lows as it was still hanging around 98%. But now it's at 104%, the highest it has been since March.

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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.