One week ago I wrote about the narrowness in the rally in terms of technology. It has improved somewhat this past week. It's still not great. But all those charts you see telling you the rally has been in five or seven stocks -- heck, even if it's 10 -- is just data mining in my view.
I'm not questioning the data. I am sure they have done the math properly. But I am here to ask if breadth has been that bad, then how did the McClellan Summation Index turn up this week? Yes, I know the turn up is a bit lethargic, but it did turn up, didn't it? And if the rally was only in fewer than 10 stocks I can assure you that this indicator would not have turned up.
I think it is because the rally has been creepy, slow, and lethargic. And it has been in the stocks no one likes. A few weeks ago I highlighted the chart of the Consumer Staples Select Sector SPDR Fund (XLP) , an exchange-traded fund to be long staples, noting it was improving. This week it crossed that downtrend line. It's a little overbought and at resistance now so a pullback would be good but that's a rally in my book.
At the same time I also thought the drugs were improving, but you can see the Health Care Select Sector SPDR Fund (XLV) has been disappointing. Yet again, the rally has been less than lively but up is up.
We've also talked about the improvement in the utilities. Here, too, there is some resistance but up is up, isn't it?
Now let's take a look at the chart of the S&P 500, but instead of using a high-low-close price chart let's use closing price only, because I think it's cleaner and easier to see the resistance from the blue lines. The flat line represents the early March high. And then there is the downtrend line taking us back to the February high. They intersect right in this neighborhood. With Friday being the last day of the quarter, I would say it's a coin toss but generally speaking this area between here and 4,100 ought to be some resistance.
Now let's look at the short-term Overbought/Oversold Oscillator. It is not yet fully overbought but if the breadth of the market is positive on Friday I expect this will stretch up over that $500 area and make it a little short-term overbought.

Yet for the time being, the intermediate-term indicators are still rising and not overbought, so I would expect if we see a short-term overbought pullback we would then see another rally.
In terms of sentiment, anecdotally I can hear the shifting. Folks who have been bearish are commenting that "stocks don't want to go down." It might not be throwing in the towel, but perhaps they have said towel in hand and are ready to throw it.
The National Association of Active Investment Managers weekly exposure report shows them now at 64. That's up from 42 two weeks ago. They were just over 80 in early February. We can see that bullishness creeping back in using this sentiment metric, but so far it is not extreme.