Stock market up, but there's underlying weakness

It's been popular to cheer the markets today, because on the surface it appears that we are breaking the stranglehold that oil has had on the markets.

It's true, oil is down and the major indices are up. I just wish it was a little better because there's a lot of weakness under the hood.

Problem is, the strength in the Dow Jones Industrial Average is due to the strength of Visa, which is accounting for about 130 of the Dow's 139-point gain. That's why the Dow is up 0.9 percent, while the S&P is up only 0.3 percent.

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The market internals do not reflect great strength. We are barely above break-even on the advance/decline line.

What's leading this magnificent rally? Utilities, up 1.6 percent and at a record high. Utilities ETF has HEAVY volume on the upside. This looks like fears of lower rates.

Big tech is not having a good day. Intel down 3.5 percent, Microsoft down 1.8 percent. Other semiconductors having an ugly day: Micron down 2.8 percent. Semiconductor ETF down 2.1 percent on VERY heavy volume.

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Big oil is getting KILLED again, particularly oil service names like Nabors down 3 percent, National Oilwell down 2.2 percent, even exploration and production companies like Apache, which is down 1.8 percent. Put buying is up in the Oil & Gas ETF.

So why are we green? Partly, it's Financials...the biggest sector by weight...they are in the green.

Why is this happening?

We did have a "V" move in the market recently, with only a couple modest down days in the last couple weeks. So we have gone from Oversold to a little Overbought. It's not a crazy idea...the tone of the Fed was clearly a bit more hawkish. Growth has a bit more risk with the Fed less helpful, but I don't buy the argument that the Fed will necessarily be tightening sooner...I'm in the "low for longer" camp. The bond market on the longer end doesn't appear worried, though the shorter end has gone up.

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As for the markets, I am fairly optimistic because no matter who I talk to, I hear of interest in buying U.S. stocks. Institutional managers who have European clients are saying everyone wants in to the U.S.

  • Bob Pisani

    A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

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