Something changed in the market on Monday. Well it's not so much that the market changed, but the indicators saw some change.
Let's begin with the small caps relative to the large caps. It's been a few weeks since we have looked at the chart of small caps Russell 2000 fund (IWM) relative to the S&P 500 fund (SPY) . About a week or so ago this chart tried to stabilize but then fell again. Monday's bounce gives it another chance to stabilize.
Recall in early March I noted at that blue arrow that this action was bearish so if you are looking for a reason to be bullish then this relationship needs to stabilize.
I'm sure you noticed that breadth had a good day on Monday, especially relative to the slightly up/mostly flat S&P. The breadth of the market has not been keeping pace with the S&P; it has been diverging during this rally. If you are bullish, you want that blue line up, while the brown line goes down or sideways because that would mean breadth is catching up, not lagging.
But here's one of the changes from Monday: the McClellan Summation Index stopped going down. It turned south in early February and no matter what the market has done it has not managed to stop going down. Monday it did. It hasn't turned upward yet (and it might not), but this is a change for the first time in nearly two months. I believe this indicator tells us what the majority of stocks are doing.
The Hi-Lo Indicator also turned upward, but that has been oversold for nearly a week now that it was only a matter of time before it got a chance to turn upward.
Then there is the shorter-term overbought/oversold oscillator. It scooted over the zero-line for the first time since early February, when it went under it. That means two things to me. The first is that in bull markets we tend to get overbought and stay there, spending a great deal of time over the zero line and in bear markets the majority of time is spent under it so all those 'new bull market' calls that showed up in February might be premature.
The second observation I have is that this means the market is no longer oversold. It has been short-term oversold for two weeks now and that is no longer the case. It is not overbought yet. It is interesting that the S&P has been green for three straight days and it has not gone to four since mid January so a down day on Tuesday should surprise no one.
The bottom line is that tech stalled while banks stabilized. I am still not a fan of tech but Monday's action did not see any damage done to the charts.