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MONTHLY Greenshoots: As in life as in markets, the saying goes "It's not where you start but where you finish." If one was to look at the MONTHLY chart below of the Nasdaq there are some encouraging signs. It is making the positive habit of CLOSING near highs, a hallmark bullish trait, not only on the MONTHLY but the daily chart would show a combined 3% move on Thursday and Friday to conclude the week in above average volume. I was a bit skeptical that the MONTHLY chart was clinging too long to its 50-MONTH SMA, and I would still like to see it put some distance from that line. The bounce off the very round 10000 number that we spoke of in January continues and I was in the minority with my sanguine view in the last WEEK AHEAD note about the ongoing consolidation in April, but it looks like it may be ready to resolve to the upside. There is a potential bullish MONTHLY MACD crossover to monitor and for all the volatility April was the smallest range with 445 handles top to bottom in almost 4 years. That is a welcome sign. Of course, risks always remain and we are seeing concentrated gains in the mega caps, but respect the PRICE action until it is no longer warranted.

"Muddy water is best cleared by leaving it alone." Alan Watts Participation Problems? Some internals is looking dubious from the market leader in the Nasdaq which is higher by 16% YTD (compared with the S&P 500 up 8, Dow by 2, and Russell 2000 by 1%). May the near future see some mean reversion? Last week witnessed some softness in the SMH with its softest WEEKLY performance of 2023 down 4.2%. That was in stark contrast to software rising by .5% (we wrote about this in a recent tech note). Looking below the chart of the Nasdaq New Highs shows a downtrend in motion that is 2 months long now. Stocks above their 50-day SMAs are hovering near an unhealthy 30%. Overall PRICE action has to be admired however with little technical damage done even though the benchmark has advanced just 2 days in the last 2 weeks. Couple that with a WEEKLY loss of less than 1%, after the prior 3 weeks gained 10% and it feels like the bulls are still in charge. Would more participation be welcomed? Of course, it would but bulls and bears have justification for their themes as the bears would say bearish harami cross Friday. Bulls would state the index is holding its rising 21-day EMA for the last month.

Small-Cap Smackdown? If conventional wisdom regarding that small caps are a good forward-looking indicator is true, sanguine feelings should be kept on hold. But truth be told overall markets have been shrugging off the wayward ways of the Russell 2000 which is now down 1% YTD whereas the Nasdaq has advanced 15%, the S&P 500 by 7%,  and the Dow 1%. Of course, a big weighting in the small-cap benchmark is the financials that have been under severe pressure. At the moment, however, there are three larger sector weightings all at nearly 15% in healthcare, industrials, and technology. Its chart below shows a gravitational pull toward a 170 pivot in a bearish head and shoulders pattern (remember the XBI still has that MONTHLY one at the round 70 figure). The IWM did make a nice stick save on 3/24 with the piercing line candle, but if that is negated it could be a long summer for small-cap bulls. Will the other major averages be able to withstand their strength in the wake of a possible persistent drawdown?

Industrial Revolution: Can there be a "rolling" bull market within a specific sector? Overall the industrials are holding up just fine as we discussed in our WEEK AHEAD Note this weekend. Monday the XLI narrowly extended its daily winning session streak to 7. But some groups within shined, including defense with the ITA up 1.6%. Waste and disposal services have been soft for much of 2023, as have railroads and airlines. Delivery services that were weak are now the best acting subsector within the group with giants FDX and UPS each 8% off their most recent 52-week highs. Perhaps business support services will be ready to take the leadership baton while other leading spaces inside the XLI get a well-deserved rest. Below is the WEEKLY chart of CTAS which is right at all-time highs and is a good indication of how small businesses around the country are doing as they help with uniforms and other items necessary for them to survive. Irish small-cap CMPR, a maker of business cards, jumped 40% last week. LZ is attempting to rid itself of single-digit status as it tries to break above its 200-day SMA for the first time ever.

"Do not worry about catching bottoms. Only liars do." -Unknown Nasdaq Regains Its Composure: After a dismal 2022 for the Nasdaq which saw the tech-heavy benchmark lose more than 30%, and the XLK fell more than the S&P 500, ending an 8-year streak. Of course, Friday not only produced a MONTHLY CLOSE, but a quarterly one as well. The last 5 months have been a pattern of one up and one down, but give credit to the last 3 advancers all CLOSING at tops for the MONTHLY range. The Nasdaq roared to begin 2023 with an 11% jump, its best in more than 20 years, and bears salivated when February did not see any follow-through. March was pivotal to see which way this was going to break and the bulls stepped up in fine form, with the benchmark up nearly 7% crushing the S&P 500 and Dow which rose by 3.5 and 1.9% respectively. Round number theory has played a role with 10000 holding last October, and 11000 figure on 3/13 and 12000 was taken out to the upside like a hot knife through butter Friday and taking out a double bottom with handle pivot in the process. 13000 which was a roadblock last August looks like a likely target in the neat term.