Is the equity correction over?

There has certainly been plenty of volatility the past 6 trading days. The 50day moving average in the S&P I spoke about recently has been a magnet for activity as the broad market attempts to decide which way it wants to go. One day up...the next day down. Driving day traders crazy and technicians on the fence about the next direction.

Overall, given that the 50day moving average was again breached to the upside today and closed right at the same highs from April 12th and 13th the benefit of doubt has to go to the bulls. But I am still somewhat hesitant to say we are close to retesting the March/April highs because of a few reasons.

First, is that we have not yet breached the closing high from April 12th. As you can see from the chart below we are very close, but until we see that push I am reluctant to call an all out push higher.

Second, is that we are not seeing broad based rallies in all sectors. There is still some rotation out of energy as highlighted recently, as well as gold miners which continue to look weak. Until all sectors (except for maybe the defensive sectors such as utilities and healthcare) start to find buy interest, I remain hesitant.

Third, we are still not seeing small caps recovers over their 50day moving average as you can see in the 2nd chart below of IWM. If the risk-on trade is going to BE ON, and carry the market back to its recent highs, then small caps have to be there too. So far, although IWM has seen a rally off the 100 day moving average, it seems more like a countertrend bounce to me than anything else.

There are plenty of other reasons to be cautious here...but lets take this one simple post at a time.