Monday, April 05, 2010

Morning Briefing for April 5th: Watching Divergences

9:47 AM CT - I've added the chart of NYSE TICK (top chart) to show how buying sentiment is strongly dominating the session. That is expanding market strength, with small caps leading the way higher. Clearly, the theme of robust growth is keeping the trend alive, and we're seeing strength among the indicators early today, with advances leading declines by almost 1600 issues.

Note that, as we're setting up for the market open, we're seeing fresh highs in the S&P 500 Index futures, but the NASDAQ 100 futures (above chart) are decently below their highs, trading in a multi-day range. The same is true for the Russell 2000 Index, which--in premarket trade--is set to open modestly higher but below its bull peak.

Meanwhile, watch the behavior of the Consumer Discretionary (XLY); Consumer Staples (XLP); Energy (XLE); Health Care (XLV); Financial (XLF); and Technology (XLK) ETFs. All are trading below their bull peaks. As noted in the recent indicator update, this has been a significant bull run, but it has become far more selective lately.