Buybacks and dividends have been one of the few bright spots for investors this year. You could see that clearly Monday. The S & P 500 was only down a few points until the last ten minutes, when the S & P dropped 20 points. Buybacks typically stop in the last 10 minutes before the close, so to many old-school types this is a sign that what little buying was being done Monday was largely by corporations buying back their own stock. Morgan Stanley notes that in the Russell 1000 over the past 12 months, cash dividends paid were up 13.0% ($646.3 billion) and net buybacks increased 137.3% to $935.4 billion. We have a shot at a record year, at least for buybacks. Overbought to almost oversold, in less than two weeks The RSI (Relative Strength Indicator, a momentum indictor for price movements over the past 14 days) for the S & P 500 was 70 on August 18th. When the RSI is over 70, it is considered overbought, when it is under 30, it is oversold. Today it is 41, so it has gone from overbought to (almost) oversold in less than two weeks. The problem is the Fed is the major mover of the markets and as we saw in May and June, when the Fed turns against you the market can go down for days in a row (during the June low, the S & P was down 5 out of 6 days, a drop of about 12%). Buying just because the market is oversold doesn’t necessarily work. As always, we need confirmation inflation is peaking. With the run-up the S & P has had from mid-June to last week, the data has to be perfect. But commodities are not cooperating. Crude is flat for the month, natural gas is up 12%. It doesn’t help that energy stocks are breaking out to their highest level since June. Occidental Petroleum hit an intraday high Monday, with Hess and Exxon Mobi l not far away from a new high either. Stocks with more exposure to natural gas (Devon, APA, Pioneer Natural Resources) have been especially outperforming. Bottom in? Maybe Tuesday will mark a short-term bottom. Bond yields are down, so tech is up. Crude and natural gas are down. The VIX (CBOE Volatility Index) is down. It would help to have a little more volume. But it’s tough when we’re in August, everyone is away, and the Fed has taken away what little buying enthusiasm there would be. Volume Monday on the NYSE, at 3.2 billion shares, was the second lightest day of the year. The lightest day of the year was a week earlier, August 18, at 3.1 billion shares. Six of the lightest 10 days of the year have occurred in the last two weeks. My usual threshold for a heavy volume day is 4 billion shares. We haven’t seen that since August 16.