Once again, the S&P 500 and the Nasdaq 100 ETF (QQQ) hit new all-time highs Tuesday, but the action under the surface was not nearly as buoyant. Breadth turned positive in the final hour with around 4,100 gainers to 3,800 decliners, but small-caps lagged again with a loss of 0.23%.
What is most notable about the market is the S&P 500 (SPY) set a record with 13 straight closes higher than the open. Buying the opening print and selling the close would have made you money every day since March 8.
That sort of action creates the impression of very broad strength, but the reality has been the opposite. Much of the market has been acting quite poorly, and certain groups are mired in bear markets. While the S&P 500 looks quite euphoric, many stocks are far from it.
The S&P 500 set a record Tuesday with 13 straight closes higher than the open.
The difficult question is how does this inconsistency reconcile itself. It can't continue for too long. Either the lagging names have to start to correct up, or the S&P 500 needs to correct. Will money rotate out of the leading big-cap names and flow into small-caps? That may be hard because if the major indices correct, then it will hurt sentiment.
There was some bounce late in the session today into the most broken small-caps, but the technical damage is quite severe in many cases, and it is not going to be an easy recovery with so much overhead resistance.
This market looks quite healthy overall, but it is creating great confusion among market analysts. There are some very unusual inconsistencies taking place, and there is no way to know how they will ultimately be resolved.
Have a good evening. I'll see you Wednesday.