The sort of action we saw on Monday will not get anyone giddy. I had thought a move over 1600 in the Russell 2000 would do it and I do believe it would have but it failed to get up and over that level on Monday and now with Google, err-Alphabet (GOOGL) throwing a wet blanket on after hours I think we're unlikely to see 'giddy' on a day to day basis.
We may however see the Investors Intelligence Bulls over 55% this week. Of course I sound like a broken record each time I say this because I have thought they'd be over 55% for several weeks now and each time I am sorely disappointed.
Here is one point of interest in the market. Breadth has been positive for four of the last five trading days and still the McClellan Summation Index needs another positive day to get it to stop going down. Let me use an analogy to help you understand the market internals and why I harp on them.
If you have ever seen a house on stilts on the beach during a storm then you know that it's not the big wave crashing into the house that takes the house down but rather the grains of sand underneath it. As waves come up and draw sand away it weakens the foundation. If you get enough of the sand washing away, eventually the house can no longer stand.
Since most houses do not collapse unless a great deal of sand is washed away, the idea is that after SOME washing away some sand is brought back and replenishes itself. Think of that sand as the market's breadth and internals. With the McClellan Summation Index heading down the sand is still washing away.
When the number of stocks making new highs is contracting rather than expanding, the sand is washing away. That too remains the case since we made new all-time highs for both Nasdaq and the S&P and there are still fewer stocks making new highs than there have been recently. And that is a surprise considering the Russell tagged 1600 for the first time since the rally began in late December.
Meanwhile the Bank Index did in fact come alive which is good news. Yes it still has resistance up here in the 102-103 area but it's a far cry from where it was when it tagged that blue line five or six weeks ago. I don't know if the Bank Index can break out this week because of that resistance but I am still a fan of the chart for now.