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New Trading Highs—Here's What Could Kill Rally

Sitting at the highs of the day with less than an hour to go in the day. Look at the market internals:

1) Greatest number of new highs on the NYSE since 2003 (!!)

2) 3-1 advancing/declining stocks

3) Dow Industrials and Dow Transports again hit new highs simultaneously

4) Cyclicals have been outperforming Consumer stocks since the beginning of March; the outperformance is now widening.

Of course, traders have been holding up this week's Newsweek, with its screaming cover: "America's Back! The Remarkable Tale of Our Economic Turnaround."

It's easy to scream, "Market Top!" when you see that...but don't get too cynical. If, as Mike O'Rourke and others have opined, the recovery goes mainstream, it will almost certainly suck in more buyers—which means this rally could have a lot further to run.

What could derail this story? The Fed implied it in their Beige Report today with these two headlines: 1) "bank lending and credit quality decline," and 2) "labor market called weak."

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