Santoli’s Monday market notes: Mega-cap bounce lifts the S&P 500 to the high end of its sideways range

Published Mon, May 24 20211:04 PM EDT

This is the daily notebook of Mike Santoli, CNBC's senior markets commentator, with ideas about trends, stocks and market statistics. The old favorites of mega-cap get rediscovered, as seems to happen every several weeks, flattering the indexes as they migrate back up toward the high end of the six-week sideways range. For now, it seems like an upside test of the nearest round number: 4,200 on the S & P 500 . Here's how it looks on the month-to-date chart so far: The market DJ might be spinning a familiar sequence, going from a Pink reset ( "not broken just bent" ) into a Kelly Clarkson rebound ( "what doesn't kill me makes me stronger" ). If this plays out with a run above the old highs (up 1% from here), the main thing to worry about is the crowd starting to sing Starship ( "nothing's gonna stop us now" ) as enthusiasm gets rebuilt. A quick jump above the prior record high that is sustained is a decent-sized "if" at the moment. The tape has done a good job withstanding the isolated blowups of frothy subsectors ( SPACs , ARKK , EVs, cloud, meme stocks , Archegos names ), and this is continuing with crypto . We've also seemingly come through a fevered phase of a collective inflation scare that's easing with commodity surges reversing and the bond market calling "no big deal" on the hot price data. Yet while some fear re-entered the market on the crypto crunch and positioning helpfully got more defensive, the indexes haven't pulled back broadly or deeply enough to guarantee a powerful snapback. But we'll see. When this market has surprised, it's almost always been to the upside. Market breadth today is nothing special. NYSE up/down volume 63/37 and Nasdaq is 53/47 or so, middling for a +1% index day. The systematic-looking flow into huge-cap growth is doing much of the work. When MSFT , FB and GOOGL are each up more than 2% on no real news, it's pretty clear this is a rotational mean-reversion move after a period of underperformance by the Nasdaq 100 names. AAPL and AMZN slightly lagging the rest of this group, as has become common. ARKK bouncing. Banks trade soft with Treasury yields easing back. Biotech still laggy. VIX succumbing to the lack of disturbances from the crypto drama and damage, back in a subtle downtrend. Summer's coming but unclear whether volatility will revisit low-teens any time soon (as it did in other resilient trending markets in 2013, 2017, 2019) simply because of the underlying velocity of the economy itself – big swings in GDP, earnings, spending make for a less predictable set of conditions than the old predictable 2% trend growth world.

Traders on the New York Stock Exchange.

Source: NYSEa

This is the daily notebook of Mike Santoli, CNBC's senior markets commentator, with ideas about trends, stocks and market statistics.

The old favorites of mega-cap get rediscovered, as seems to happen every several weeks, flattering the indexes as they migrate back up toward the high end of the six-week sideways range.