The market began to get chopped to death right around February 22nd. That's when breadth began to slow from its torrid pace. It's when the small caps started to underperform. It's also the last time the Transports saw an up day.
It has always been my contention that when the FANG stocks rally they do not tend to lead but rather suck the life out of everything else. Oh sure there are times when the FANG stocks rally and everything else does, such as January, but everything else was doing much better than the FANG names then. You do remember Apple's (AAPL) fall from grace in January, don't you?
Now let's take a look at Apple since February 22nd. It's not been spectacular but it finally moved up after three weeks of doing nothing.
And Amazon (AMZN) ? Would you look at that? It had four weeks of nothing followed by a fast 75 point run while the rest of the market sat by watching.
Facebook (FB) took its time getting going but this week it joined the FANG parade, rallying a swift 10 points after taking three weeks to give up those ten points.
Google, err Alphabet (GOOGL) has been the best of the lot with an 80-point run in that time.
I realize the decline in the small cap Russell 2000 isn't awful to most after the run it has had (about 2%) but see the run the Russell had heading into February 22nd and the sell off since? That's the change in the nature of the market in recent days.
Notice that the 10-day moving average of the number of stocks making new lows started to rise directly after that February 22 date.
Notice too that the McClellan Summation Index peaked right around that time as well.
It's all related. The Russell peaked vs the big caps then as well, despite the fact that the S&P has been red for five of the last six trading days.
So we find ourselves in a sloppy market that can't seem to break down and can't seem to rally and has managed to narrow the group rotation to a handful of names. Heck, Nasdaq, which was the best performing index on Tuesday saw the fewest stocks making new highs since February 7th. Let me remind you that was a month ago and the major indexes were all lower than they are today, not to mention February 7th saw Nasdaq down 87 points on the day.
I will end with a word about gold. Yesterday we looked at (GLD) an ETF to be long gold and I thought it could rally from this gap fill (I still do). But the resistance overhead is why I think the rally fails. However I noticed that (GDX) which is an ETF to be long the gold stocks (not the commodity) has a well defined uptrend line it bounced from, and even made a higher low and higher high Tuesday vs the prior day. It seems to me that $21.50 is a good stop area.