By Lawrence G. McMillan
Fear was strong in the market yesterday, as selling ballooned by early afternoon. The losses were larger and increasing when a rumor started that the Fed is close to taking more action. That news reversed the market upward, cutting some of the losses about in half. But then, after the close, Apple (APPL) reported a slight earnings miss, and S&P futures plunged another 7 points in after-hours trading. However, since then things have improved greatly, and those futures are now trading 7 points higher than yesterday's close (i.e., a 14-point rally from those after-market lows). As a result of yesterday's late rally, $SPX managed to close near the high end of the 1330-1340 support level. The intraday low was at the low end of that range. As a result, the $SPX chart still has a bullish channel (even though the bottom of the channel was violated, intraday).
Equity-only put-call ratios remain on buy signals. This is somewhat amazing after three days of heavy selling, but the data is what it is, and these ratios have not curled upward, which would be negative. Rather they are very near their downtrending lows, which is bullish for stocks.
Market breadth was dismal again. The "stocks only" breadth has been more than –2000 (i.e., at least 2000 more declines than advances) for three straight days. That is quite unusual and, as a result, the "stocks only" breadth oscillator is already in oversold territory...
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