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The market showed some strength yesterday, led by tech. The NASDAQ was +1.54%, the S&P +0.36% (S&P Tech (XLK) was +1.59%) and the Russell +1.13%. Technically, however, the market seems trendless with both the NASDAQ and Russell smack between their February All Time Highs and March Correction Lows.
The S&P 500 looked almost certain to make a new All Time Closing High yesterday before collapsing in the final minute of the session.
That’s a pretty bizarre last minute on top of the market’s strange behavior on Monday when something extremely rare happened: Advancers on the NYSE were less than 35% when the S&P was within 0.25% of its All Time High. That’s only happened a handful of times with negative near term implications for stocks every time it’s happened in the last 30 years:
In terms of what those weak days meant for forward returns, the S&P had some trouble holding near its highs when so many stocks had been declining under the surface. Every signal in the past 30 years showed a negative 1-month return (“Why Monday was so unusual”, Sentimentrader, Wednesday March 31).
It’s very hard for me to determine the market’s trend right now or even its leadership as it seems to act erratically from day to day. As a result, I don’t have strong convictions on which way the market is headed or what groups are the leaders or laggards at the moment. If I had to make a call, the technicals appear slightly bearish to me, emphasis on “slightly”.
In yesterday morning’s blog on Crescat Capital’s March Letter “A Collision of Macro Narratives”, I had a chance to review the state of the precious metals miners and it was not looking good from a technical standpoint. Happily for us bulls, they bounced hard yesterday and are hanging in there technically – if barely. In yesterday morning’s blog, I posted a chart from Crescat showing the disconnect between the miners strong fundamentals and current price action. The macro environment is, of course, very supportive of the miners as well with inflation starting to rear its ugly head.