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Bears were no match for bulls again

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It was somewhat of a rollercoaster ride on Tuesday but in the end, the bulls fended off the midday attempt by the bears to push the indices lower. The Dow gained 172-points by the close, the Nasdaq "FANG" type stocks led the way, while small caps were up again but lagged a bit on the day. Oil was down for a second straight day.

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The market seems to be running on all cylinders with internals looking strong, like breath (stocks up vs. stocks down) being very positive, and indicators like the VIX being in free fall. But, like stocks were probably taken down too hard in December, this rebound is likely getting close to being too hot with many indicators getting overbought.

Looking at the action over the last year or so, this "great" market run really only has the S&P 500 back to where it was in early December, again in early November, and even as far back as January and February of last year. It's possible it's just in a core trading range now with 2800 at the highs, and maybe 2600 at the lows, assuming the drop to 2350 was an exaggerated move down after the possible exaggerated move above it last fall to 2950. Only time will tell




My point is, yes we've seen a tremendous rally, but it may have just brought us back into "the range." The market just seems to like to move in one direction or the other, longer than seems reasonable. We saw it on the downside in December, and now this rally.

It was interesting to see Google being down 3% in after hours trading yesterday after earnings and being the reason why the futures were struggling overnight, and then it came around to close positive on the day. Investors can't seem to get enough FANG. That sounds like a red flag to me, but what do I know? I sold a long time ago.

Not much has changed analysis-wise so this will be a quick one...



The S&P 500 / C-fund rallied and hit the 200-day Simple Average yesterday at the morning highs, and backed off initially, but later rallied again to close just off the highs and just below the average.




The DWCPF (small caps / S-fund) is now solidly above the 200-day EMA, but still quite a bit below the 200-day SMA (not shown) but what we are showing is the possible new range for small caps between about 1275 and 1400. That could mean there's more room to run above, although the prior peaks were closer to 1375.




The EFA (EAFE Index / I-fund) had a strong showing yesterday despite the dollar rallying again.




The AGG (Bonds / F-fund) bounced back yesterday from a two-day pullback, so that old high in early January seems to have held as support so far.





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Thanks for reading. We'll see you back here tomorrow.

Tom Crowley


Posted daily at www.tsptalk.com/comments.php

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SPY (C Fund) (delayed)

(Stockcharts.com Real-time)
DWCPF (S Fund) (delayed)

(Stockcharts.com Real-time)
EFA (I Fund) (delayed)

(Stockcharts.com Real-time)
AGG (F Fund) (delayed)

(Stockcharts.com Real-time)