It was a quiet day of action on Tuesday that benefited from the failure to build on Monday's reversal. In addition, there was a "don't short a dull market" dynamic that also gave the bulls an assist. At the end of the day, breadth was very good at around 5,800 gainers to 2,300 decliners.
Small cap stocks led the day with a gain of 1.4%. There has been some "January Effect," as beaten-down small names recover from tax selling, and there also has been better stock picking as traders look ahead to fourth-quarter earnings reports.
The most important thing about the action Tuesday was that there wasn't any market-moving news. Fed Chair Jerome Powell made some comments this morning, but they didn't have any impact on shorter-term monetary policy. We didn't have any other Fed members making headlines for a change.
Wednesday should be another slow news day, but we should see increased positioning ahead of the consumer price index report on Thursday morning. Expectations are that inflationary pressures are still dropping, but there is the risk of a surprise that would really shake up some folks that are counting on an increasingly less hawkish Fed.
Conditions going into earnings and more economic news are very interesting and are likely to trigger some substantial moves in the next few weeks. I'll discuss this more in the morning. Have a good evening. I'll see you tomorrow.