Stocks are higher today, extending yesterday’s rally and with record highs in sight. Oil is retreating sharply and mega-cap tech continues to provide leadership.

Small Caps are outperforming today, indicating broad-based market participation. The main message is that they act like coiled springs ready to pop.

Communication Services (XLC) is holding the widest gains driven by strong gains from Meta Platforms (META) and Alphabet (GOOG/L). Consumer Discretionary (XLY) is the second-best performing sector driven by gains of Tesla (TSLA) and Amazon (AMZN). Meanwhile, Energy (XLE) and defensive consumer sectors are underperforming.

The Ten Year Tresury Yield (TNX) is continuing to move lower from its recent spike. Today it is down 2.5 basis points to 4.272%.

Small Business Optimism declined to its lowest level in nearly a year. The war with Iran pushed up energy prices causing sentiment among small business owners to decline.

Redbook retail sales showed year-to-year growth, but the question remains how much is due to inflation.