Major averages were roughly flat yesterday on mixed volume, although the NASDAQ suffered a distribution day, reversing down 0.33% on slightly higher volume. While the S&P 500 broke into new high ground, the tepid volume figures as well as action from leading stocks pointed to a market that is indecisive. Big caps, utilities, transportation, defensive, and cyclical stocks have helped push the S&P 500 into new high ground. But these groups are laggards and show the exhausted nature of the general market. Further, the NYSE advance-decline line is at a new high even while the NASDAQ Composite and Russell 2000 lag well behind and the NASSDAQ advance-decline line plumbs lower lows. Nevertheless, this QE manipulated market seems to be trying to push higher once again, but the rally is more of a "half-rally" given the lack of participation from more dynamic growth names.
Buyable set-ups remain far and few between, and as we wrote yesterday the most likely set-ups would be shakeout-plus-N type set-ups and bottom-fishing pocket pivots. With the market trying to push into new high ground, at least as far as the NYSE-based indexes are concerned, we would expect to see more stocks stepping up as potential leaders, but so far that is not happening. As well, the market is suffering from a dearth of "new merchandise" as newer, more dynamic and entrepreneurial situations are noticeably absent. While the MDM is currently on a buy signal, we would advise caution on the long side of this market.