I realize the news after hours feels a bit like a whirlwind and I know many will want to make comparisons to the Nixon era or even the Clinton impeachment. Feel free to do so from a political standpoint or a news event but as I wrote, back when President Trump was inaugurated, markets seldom care about politics; they care about financials. Earnings, the Fed, that's what markets are focused on. The column can be found here .
So let's try and put all that news aside and focus on the statistics and the indicators. Breadth was good but honestly considering the Russell 2000 tacked on 20 points and breadth on the NYSE wasn't even quadruple digits as it has been means in general breadth was not as good as it has been. Let me reiterate, this does not mean overall breadth was poor, it means for this one day, stocks acted tired. Overall breadth remains strong.
The Transports made a new high. This is a positive as well. The Russell made a new high. Here too this is a positive, although there is some resistance from this trend line for the Russell in the near term.
The number of stocks making new highs, which I praised after Monday's rally was not nearly as impressive on Tuesday. Monday saw almost 150 new highs while Tuesday saw 162 new highs. With the Russell at a new high and the S&P at a new high, there should be an explosion of stocks making new highs. Over 200 would have been a good step. Notice I'm being lenient by not even commenting how few new highs there are compared to January! For the day this statistic was disappointing.
Then there was the VIX which closed green. Keep in mind the discussion from yesterday about the very low ETF put/call ratio. It has tended to matter in 2018.
Yet we re not overbought.
The McClellan Summation Index is rising, albeit not at the same pace the S&P is, but it is rising. It now needs a net differential of -1800 advancers minus decliners to turn it back down. That's a decent cushion. At -2000 though we consider the market a little bit overbought.
In sum there was some signs of tiredness in the market on Tuesday. But it was the fourth green day in a row and we have not seen the S&P go for more than four in a row since it went six in a row off the February low. So as I said yesterday, it would not be a surprise to see a down day.