One thing that is clear to me is that unless the Fed does a pivot -- where has the pivot chatter gone? -- the fundamental market folks are not going to turn bullish. The pivot chatter is, in fact gone. Now the chatter is about a soft landing. The fundamental analysts are still quite certain we will get a recession and the market will go down.
I have said this before, but it is worth repeating: I cannot recall another time in my four decades of market watching that a recession was so well telegraphed. I don't remember calls for a recession so prevalent in 2000-2002. Nor can I recall folks fretting over one in 2007-2008. It's possible there were some who did, but it is pretty much consensus now.
That's a long way of saying that unless the Fed signals an end to interest rate hikes and a lowering of rates I don't think we are going to get a huge shift in sentiment in the next week or so. Even if the S&P 500 can cross over that well-watched 4100 area.
All in all, Tuesday's rally had some of the best statistics for market internals since Nov. 30. So, sure, maybe it was end-of-the-month activity that we saw, but recall I said I wanted the market to rally one more time this week. Of course, I didn't think it would do it all in one day.
The reason I thought we could rally one more time is the math behind the Oscillator. We have two negative numbers to drop off the moving average by Friday. Beginning Friday, the Oscillator ought to be back to an overbought condition. Depending on what the market does in the next few days we could see the Oscillator at a lower high.
The intermediate-term will get overbought around mid month, which oddly lines up with all those "seasonality" charts we see for February.
In the meantime, breadth was good enough to keep the McClellan Summation Index rising. It now requires a net differential of negative 2,300 advancers minus decliners on the New York Stock Exchange to halt the rise. We entered the week needing negative 2,400.
The number of stocks making new highs continues to lag, especially on the NYSE. They just can't seem to surpass that 120-area reading we saw mid month. If the S&P can cross 4,100 and new highs cannot surpass that mid-month reading, that will be problematic, especially since we're heading into another overbought reading.
Finally, just as I decided to pick on the transports, they rallied. They have not made it to a higher high yet, though. In fact, the only chart that moved out of the range was the Russell 2000.