As indicated Friday markets were short-term much oversold making a rally likely as per the trusty $NYMO (McClellan Oscillator—see below). But even though headline indexes closed higher breadth remained negative and the NYMO added to the oversold conditions.

Some of the power barkers were out campaigning for a rally as well. The ECB’s Mario Draghi was quoted to say: “We are ready, able and willing to intensify QE”. It’s debatable whether doing so is a good thing but the belief in central bank candy still remains dominant for most traders.

Putting up Orwell’s quote is akin to comparing his thinking to Roman times when Bread & Circuses was used to keep the masses entertained with spectacles held in the colosseum. Today we’re presented with Star Wars, the Super Bowl and the like to keep the masses distracted from more issues.

Heading into Monday crude oil had posted a record amount of short interest—it rallied nearly 2% at its peak then fell to close at .8% higher.  

Market sectors moving higher included: S&P 500 (SPY), Dow (DIA), Tech (QQQ), Energy (XLE), Healthcare (XLV), Consumer Discretionary (XLY), Consumer Staples (XLP), Utilities (XLU), Emerging Markets (EEM), China (FXI), India (EPI), Asia ex-Japan (AAXJ), Japan (EWJ), South Korea (EWY), Russia (RSX) and a handful of others.

Market sectors moving lower included: Biotech (XBI), Banks (KBE), Oil & Gas Exploration (XOP), Energy MLPs (AMJ), Materials (XLB), Small Caps (IWM), Mid-Caps (MDY), Junk Bonds (JNK), High Yield (HYG), Investment Grade Bonds (LQD), Bank Dividend (PFF), Gold Stocks (GDX), Gold (GLD), Silver (SLV), Semiconductors (SMH), Government Bonds (TLT), Natural Gas (UNG), UK (EWU), Brazil (EWZ) and many more.

The top ETF daily market movers by percentage change in volume whether rising or falling is available daily.

Volume was still high on the day, and even with headline indexes closing higher distribution remained dominant.

Surprisingly perhaps short-term oversold conditions remain as breadth declines again. Tuesday, the Fed begins its meeting which ends Wednesday. Most everything else will be ignored until Wednesday.

Remember as well, options expiration is Friday and it is heavily weighted toward puts as investors seek protection from a collapse.

Let’s see what happens.