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Apple, other tech companies lead, but rally shows signs of wear as market hits new highs

With the S&P 500 barely at a new high, traders will be watching for the next catalyst Tuesday to help it break out, as earning season starts to wind down.

The S&P rose just nine-hundredths of a point Monday to a new high of 2,399, but some parts of the market have been showing signs of wear while the big name tech companies have been the engine driving the market higher. The Nasdaq also edged up nearly 2 points to a new high of 6,102. At the same time, the VIX, the CBOE's volatility index, sank 7.6 percent to a 10-year low of 9.77.

Apple surged to a new high and topped $800 billion in market capitalization for the first time Monday. But biotechs, which have been trying to gain some momentum, faltered, and the IBB iShares Nasdaq Biotech ETF fell more than 2 percent in Monday's trading.

There are a few economic reports Tuesday, including the NFIB small business survey at 6 a.m. ET; wholesale trade for March at 10 a.m.; and JOLTS job opening data, also at 10 a.m.

Earnings are expected from Discovery Communications, Allergan, Liberty Media, Dean Foods, Aon, Duke Energy, Valeant, Wayfair, SeaWorld, Tegna and Sempra Energy, before the bell. Disney, Electronic Arts, News Corp, Axon, Blue Buffalo, TripAdvisor and Hostess Brands report after the market close.

Crude steadied Monday, with West Texas Intermediate up 21 cents at $46.43 per barrel. The S&P energy sector was up 0.7 though it is down 3.5 percent in the last month.

"Oil below $50 is not constructive for bulls," said Scott Redler, partner with T3Live.com. "Energy shares have been laggards for 2017, and are starting to turn into a headwind." Energy shares are down 10 percent year-to-date.

"It's not the time to be all in short, but there's less participation and the rally's getting narrower. There could be a corrective phase for the summer," said Redler.

Redler said some key areas, like small caps, have lagged. "The last breakout there was more participation. This time there are less names involved. None of the infrastructure plays are participating," he said.

He said the French election was expected to bring a big rally, but it fizzled.

"Most traders went long into the weekend thinking we'd get some upside follow through. Basically, Europe opened higher, and took profits. I think it was too widely expected [Emmanuel] Macron was going to win," he said.

The super low level of the VIX was seen as a sign of the market's complacency by some traders.

According to analytics firm Kensho, when the VIX closes below 10, as it has done in five instances since 1990, stocks were mostly lower a week later. The S&P and Nasdaq were lower a week later four of those times, with average losses of 0.64 percent and 0.75 percent respectively.

Disclosure: CNBC parent, NBC Universal, holds a minority stake in Kensho

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