If the US stock market is in a bull market, analysts say, "It's different from the past 30 years!"
The put/call ratio of the US stock market options has dropped to the lowest level since February, "suggesting that some complacency is creeping back."
"if the US stock market is a new bull market, then it is different from any bull market we have seen in the past 30 years."
This is the title of a report released by BTIG technical strategist Jonathan Krinsky last weekend.
He has been skeptical of the market's rebound for the past few months, and the recent rise has provided more evidence for his pessimistic view.
The NASDAQ-100 hit a 13-month high, and its relative strength index (RSI) also broke through the 70-point mark, which is a signal of overbought.
Arguments against the US stock market
Krinsky analyzed long-term data representing 98% of the US stock market, the Russell 3000 index, and found problems with the so-called market breadth.
Krinsky wrote: "In the nine significant declines since 1995, the average percentage of the Russell 3000 index above the 200-day moving average 150 days after the low point was 70% (lowest 56%, highest 88%)."
The average percentage of trading above the 200-day moving average this time was only 36%. This is the "weakest magnitude in the past 30 years."
He added that the market needs to see small-cap stocks break through the upper range of their months-long volatility range to achieve "meaningful market breadth expansion."
Krinksy also believes that contrary to expectations at the beginning of 2023, most of this year's market gains (the S&P 500 rose 9.2%) may have already been realized.
He said: "We hear a lot of predictions that the first half of 23 will be difficult, and then the second half will recover. Ironically, this is what happened last year. So far this year, the trend of the S&P 500 index is exactly the opposite, and we believe that the remaining time this year will become more difficult."
He also pointed out that the combined put/call ratio of the US stock market has fallen to the lowest level since February, "suggesting that some complacency is making a comeback."