1.25 On A Number Line

The good news is that the number of stocks making new lows is not expanding.

By HELENE MEISLER

Sep 13, 2021 | 06:00 AM EDT

Lines. Lines. Everywhere are lines.

Nosotros discussed the uptrend line in the Dow last week. Needless to say it finally broke on Fri. If yous use just lines on the chart - not necessarily how I view the market, since I prefer indicators to lines - y'all tin can see the bottom of support at present shows up effectually 34,000.

Still no 1 looks at the Dow as yous know. They watch the S&P 500. And the S&P 500 has a line as well. The Dow's line goes back to February (and then it's longer in duration than the Southward&P 500) while the S&P'southward goes dorsum to May. The S&P 500 has 5 touches on its line, which means it's a skillful line, too. You lot tin meet that later Friday'southward decline, information technology is now endmost in on the lower line.

The upper line has been a good guide for usa since the bound when information technology comes to pullbacks, and so there is no reason to think the lower line shouldn't be good back up either even though my guess is the lower line volition prove up on every screen out there by Monday, if not before. In other words, it is quite obvious, and I prefer when we pause a line everyone watches considering that creates a better shakeout.

If we look at the indicators instead of the lines, it's a different pic. My ain Overbought/Oversold Oscillator is not oversold. I tin can't make it get oversold either as the math behind information technology says information technology won't be oversold until after this week. Observe that it is still hovering just over the zero line for both the NYSE and Nasdaq.

If you adopt a different visual on the oversold condition, then allow's use the 'what if' for the McClellan Summation Index. Here nosotros see what it will take to turn the Summation Index from the current down to back up. Currently, it requires a net differential of +i,400 advancers minus decliners on the NYSE. At +ii,000, information technology steps a toe into oversold territory. And so hither too, it says some more downside would go it to an oversold status.

Then we accept a market that is getting close to support simply not quite oversold still.

The good news is that the number of stocks making new lows is not expanding. Recall most of the summer my complaints were how new lows refused to contract. That is not the instance now because last calendar week they sold their dearest mega cap tech stocks, non the stuff that has been down and out.

The other practiced news? My Sat Twitter Poll showed 59% looking for more downside for the South&P and 41% looking for upside. In the concluding 16 months that I have been running this poll, each fourth dimension the spread was that wide the Southward&P saw an up week. Twice information technology began the calendar week on the downside though. That would be my preferred scenario (some more down first) because I'd like to go those indicators oversold. Volition the marketplace accommodate me?

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