March Madness  might reasonably describe the bullish rationales that predominate market behavior currently; aside any day (of course) we get an 'actual' S&P decline like Tuesday's projected likely faltering morning rally; and then failing midday recovery effort. Even now they'll say just another dip; and ignore possibilities the market is running out of fuel, as well as encountering turbulence as our text and videos discussed likely.

They'll reference the extended value levels or concentrated gains led by 'only' a small portion of leading stocks as irrelevant; rather than point to a dearth of breadth or precedent being set not only by the (very logical) denial of the Broadcom / Qualcomm deal, but by Tuesday's news (valid or not in terms of what happens) of greater restrictions aimed at China.

For now downside follow-thru Wednesday and a 'hail Mary' rally follows.
 

Certainly the concerns are real; the Spring rally 'affair' has been ragged as I have anticipated. That's because (as members know), we were very keen both with projecting (in late January) an early February break; and when we got down to the (in my opinion desperately engineered but still viewed as short-term valid) March S&P double-bottom at the 200-day Moving Average. I saw it worthy of a long-side trade ideally up to S&P 2750 and maybe 2800 if they pressed it. But we did not suggest long-term investors add positions unless it was in a handful of low-multiple value stocks; because we thought the rebound was just that; not more. It was dicey (as part of the Spring rally); and clearly remains 'at risk'.

Capital Flow Risks Emerge

I've explored this repeatedly in recent weeks; but highlight the challenge that exists now; as I outlined in New York two weeks ago as well: there's a dearth of new retirement (seasonal reinvestment) funds; a potential of a choking-off of foreign funds (both from OPEC countries as Petrodollar recycling) dries up (as the U.S. becomes, thankfully, self-sufficient), and of course the essential 'confrontation' regarding trade and tariffs, which is unpleasant but essentially the core basis for any support of Trump (it's not his ingratiating charming personality and articulate eloquence). So I admire his tenacity, know we require many of the policies; but foreseeing this way back in 2016; I saw no reason to chase stocks in 2018. 

That's macro; more recently, although we had a projected 'structured' technically-based trading low over a month ago, and noted the ensuing 'automatic rally'; was all occurring at very high levels; thus would occur but be suspicious in terms of durability, from the outset. That's why you frequently saw 'earnings' upgrades for already-expensive FANG or other leading stocks. 'They' knew rotation alone wasn't going to perpetuate the move (though it helps); hence concentration remained in the handful of stocks that dominated the preceding thrust.

Some are being crushed. I could not have been more earnest in calmly saying these are not levels at which any of those stocks were realistic buys; even if they went higher. I enjoyed my opening statement at Expo in New York; where I said what I told our members here: 'I just hope the market holds together long enough for me to warn guests in New York; and (I said at the Marriott), it barely has.. so now look out below'. Yes it dropped; came back to slightly higher highs with no 'oomph'; and here we are, as traders nervously eye what I said was a stretched market.