A Technimental Update

After five consecutive up weeks in the market, it shouldn't have been all that surprising that we had a down week last week. Although the S&P 500 did fall more than I would have guessed. But the Nasdaq outperformed on a relative basis, and continues to do so today.

I believed the market was due for a pullback as sentiment had become too complacent. But after last week's decline, we are starting to see sentiment move back in the right direction (if you are a bull).

The CBOE put/call ratio finally got back above 1.0 on Friday, and is above that level again today. Ditto for the ISE Sentiment index. Also, the VIX spiked 24% on Friday, which is a huge move. If the VIX is the "fear" indicator, its hard to argue that fear didn't creep into the market last week. While short interest on the NYSE edged slightly lower, the short interest ratio is still near a 5-year high (IBD).

Looking at breadth, the NYSE saw 94% downside volume on Friday. That is often a level associated with a washout of sellers. And the only readings in the last year where we have seen the oscillators lower than today were during the March and August corrections.

Am I calling a bottom? No. I use the price/volume action as my primary indicator. But I do take notice these sort of things I am seeing under the hood. And I did start putting a little money back to work late on Friday.