interesting piece by helene meisler this am
Nasdaq Tidbits Add Up to Possible Rally
By Helene Meisler
Special to TheStreet.com
06/17/2002 09:07 AM EDT
It's not like you can say that sentiment has gotten too bearish -- certainly not if you're monitoring the Investor's Intelligence numbers. Sure, they've backed off their too-bullish readings, but would it shock you to know that we're not even close to the level of bearishness we saw at the September lows, despite the fact that we're now essentially trading at or near them?
Even the Specialist Short Ratio is nowhere close to where it was in September, even though the market has been down these past four weeks.
On a shorter-term basis, we do have the Market Vane bullish consensus still hovering in the 20% range again this week. And the put/call ratios have been rising in a major way.
So where is sentiment? Absolutely nowhere you can put your finger on: short term, too bearish; intermediate term, still too bullish.
And the oversoldness? Well, that's been the case for weeks -- or is it months?! -- and the rallies have all been short-lived and mediocre at best. Last week's action kept this indicator heading even lower. No, it's not plunging; it's grinding. Plunging is what happens when you have capitulation, and we don't have it.
It's probably capitulation that turns the sentiment indicators toward too much bearishness as well. That's why sentiment hasn't exploded toward bearishness the way it usually does when the market is down as much as it is this past month.
However, amid all of this grinding, I made some interesting notes on the Nasdaq in the past week that I'd like to share with you.
On Friday, June 7, the Nasdaq plunged below 1500 for the first time since September, and the number of stocks making new 52-week lows increased markedly to 245. In the past week, the Nasdaq has tried desperately to hang on to this 1500 level, but Friday morning, it finally gave way, breaking the previous Friday's intraday low. However, this time around, the number of stocks making new lows actually contracted to 219.
One reason I mention this is because the Nasdaq toyed with the 1500 level all week, but didn't break that previous low. We've seen that before, but the number of stocks making new lows has typically continued to expand, despite the averages holding. This time, the contraction in new lows was taking place all week. So maybe some of these stocks are getting tired of going down?
Why should I make such a fuss when that's all there is to hang a rally on? Well, if the Nasdaq can manage a rally and if it can manage some decent internal statistics on such a rally, the McClellan Summation Index (remember, I use volume figures for the Nasdaq, not advance/decline figures) will halt its slide. That's the first time in a month that we've been able to say that.
I know that's a lot of "ifs," especially in this market environment, but it's worth noting. I also saw one more divergence last week: The Nasdaq 100 went to a new low vs. its September low, and the Nasdaq Composite did not. These two indices tend to move in tandem. When one doesn't confirm the other, I believe it's noteworthy.
I think we need a lot more than these few tidbits to call a major bottom, but at least some of this adds up to a market that might just try to rally this week. |
