Well, wasn't that an interesting day in the market....
The biggest change for me was anecdotal, because that ramp upward in the last hour or two seemed to have silenced the complainers. I think it's because it stopped the leakage that had been going on for a few days.
And, yes, most are busy being breathless about the market's rise, but do you realize that in the last six trading days Nasdaq's breadth has been positive only once? That's a lot of leakage. It's not the sort of selling that makes you think folks are selling hard; it's more of a buyer's strike, in that they just can't seem to find any friends.
But let's talk about the statistics. Breadth was negative, despite the big rally. Upside volume for the New York Stock Exchange was a mere 47%. Nasdaq fared a mite better with a showing of 52%. None of these scream that folks are putting money to work, except in a narrow group of stocks.
After all, the semis were red, the transports were red and the banks were red. Of course, you saw the Russell 2000 was red, too. Take a look at the Russell fund (IWM) relative to the S&P fund (SPY) (small caps to large caps) and the decline since mid-March. The ratio is basically back to where it started the year. When this is rising, breadth is usually widespread; when it is falling, it is often contracting or not keeping up.
Yet, despite all of this underperformance, the McClellan Summation Index has not yet stalled out. It still needs a net differential of negative 400 advancers minus decliners on the New York Stock Exchange to halt the rise (which is obviously not a large cushion, especially with the major indexes at their highs). So, despite the under performance, it is still on the positive side of the ledger.
Yet, the number of stocks making new highs continues to contract. Tuesday's were fewer than Monday's, which were fewer than a week ago, which was fewer than a few weeks ago, etc. Notice that new highs peaked right around when that IWM:SPY ratio peaked. It's a lot easier to find winners when there are more of them.
In any event, the overbought reading we saw last Friday has manifested itself in the small caps as the Russell has now had three down days or at least three days of chop. Nasdaq's Momentum Indicator reached its overbought reading on Tuesday. The intermediate-term oscillator will not be overbought until the end of the week, which is why I thought this week could be more choppy than anything.
The bottom line is that I do not see anything that would change my view that the remainder of the week could be choppy, but I still expect a pullback in the latter part of April. And the latter part of the month is coming quickly.