Oops, there it is!

The Dow has joined the S&P 500, and now all eyes are on the NASDAQ Composite to see if it joins the party.  That means a close of 5218, although the index reached an intraday high of 5,231 just about a year ago.

However, there are two other areas that need to move higher to corroborate with this current leg higher, and they seem counterintuitive. Oil needs to get back through $51 a barrel, and the transportation stocks must reverse a long slide. The common denominator for these is demand, and that makes both moving higher a pretty good proxy for the economy.

West Texas Intermediate (WTI) wants to breakout, but it must see a greater drawdown of crude and gasoline.

Transportation names aren’t making highs anytime soon but watch the rails closely.

Also, keep an eye on defensive safe havens to see if we are really on the cusp of higher highs, which would need more buyers in the mix at some point. (I love how this rally continues to be hated and scorned, but we need inflows to carry stocks higher and that means folks have to blink. It reminds me of the South Sea Bubble of the early 18th Century where Sir Isaac Newton warned everyone it was a scam, but he finally was lured in him only to lose his entire fortune. This market is a long way from brilliant bears throwing in the towel; and that’s the good news.)

We have a major win in SPDR Gold (GLD), which I initially saw as oversold and a perfect hedge, but I see signs of a move to $1,450 plus, so I am grappling with letting it dip near-term.   (If cash flows out of gold and bonds into stocks, then there is less pressure to make a decision now- which underscores the need for diversification.)

Today’s Session

It’s all quiet on the western front, although stocks are still enjoying an upward bias.  A series of tests, including earning season getting fully underway, will provide challenges.  Today’s session could be decided by the results from the EIA petroleum report and to a lesser extent the Fed’s Beige Book report.