The Nasdaq closed above 5,000 for the first time in 15 years Monday, climbing to 5,008, a gain of 0.9 percent. The Dow was up 155 at 18,288, and the S&P 500 rose 12 points to 2,117.
"Sentiment is definitely not cheering it," said Scott Redler, partner with T3Live.com, on the move in the Nasdaq composite. The index's all-time closing high is 5,048, a level it reached 15 years ago next Tuesday.
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"The market's enjoying gains, but it doesn't have that much power, considering the fact the S&P 500 just had a 5 percent move and the Nasdaq just had a 7 percent move (for February). Traders don't want to get caught if a pullback materializes," he said.
Art Cashin, director of floor operations at UBS, said stocks rallied Monday in part on new money coming into the market for March. Cashin said he expects the fresh money flow to help lift stocks Tuesday as well, but by Wednesday traders could turn to the European Central Bank meeting Thursday and Friday's U.S. nonfarm payrolls.
"Traders are a little concerned that back on the 25th of February, that they hit 2,120 on the S&P and they haven't gone past it yet," said Cashin.
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Traders say the market is also waiting for the Fed meeting on March 18, after the central bank's chair, Janet Yellen, spoke to Congress last week. "I think Yellen primed the market that 'patient' could be taken away from the statement. The narrative really is going to be how good is our economy really, and how fast will they raise rates, and will the market absorb it."
The removal of the word "patient" would signal the Fed is on the path to hike rates.
MacNeil Curry, head of global technical strategy at Bank of America Merrill Lynch, said the market appears to be setting up for a pullback this month and he does not expect a repeat of February's strong performance.
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"In the next couple of weeks, things look a little heavy. In the month of March, we see backing and filling," he said. Curry said he's been watching the volatility curve on the S&P 500 and it shows complacency, a potential sign of a pending top.
Curry said he doesn't anticipate a huge selloff but stocks could struggle. He also said Treasury volatility is "sneaking up" on investors.
"U.S. 10s (10-year Treasurys) look like they could make a run to 2.33 to 2.34. ... A lot of people haven't been paying attention to it. If we get a pop here, it could lead to a little risk off," he said. The 10-year was yielding 2.08 late Monday, after hovering at 1.99 percent early in the day.
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Curry said he is also watching the dollar, and he expects it to make another leg up on higher rates.
Besides car sales, several retailers are expected to be in the news Tuesday. Target meets with investors, and according to news reports, it will outline its plans for groceries. AutoZone, Best Buy, and Dick's Sporting Goods all report earnings.
Earnings are also expected from Bank of Nova Scotia, Barclays and JD.com, before the bell. Bob Evans, Smith & Wesson, TiVo and Ascena Retail report after the close.