Monday Midday Color

Here's what's piquing my interest so far on tax day.

April 15

Just because.

Breadth Review

There was another surge in French stocks hitting multi-month highs to end last week, at nearly 50% of CAC components.

That has helped to push its long-term breadth momentum to an extreme.

In the U.S., the McClellan Summation for the Dow just hit 1500. It's been tough to maintain that kind of surge.

Same with the Nasdaq 100 (it never got this high prior to 2015).

Among U.S. sectors, that's also the case for basic materials.

China Rising

According to the WSJ, economic surprises in China are becoming increasingly more positive. The Citi Economic Surprise Index is now above +25 for the first time in more than 220 days.

That's been a decent sign over the next couple of months.

Seemingly less positive, the Shanghai Composite rallied 2% intraday to start the week, then reversed to close down on the day. During its intraday run, it had surpassed its previous 52-week high close.

This seems like a negative technical reversal, but historically that hasn't meant much for the index.

After 1993, these "negative technical reversals" preceded gains over the next three months every time.

Quality Counts

Bloomberg notes that "quality" stocks have had such a run that they may have gotten ahead of themselves. The forward P/E ratio for quality stocks around the world has ran ahead of the forward P/E for the broader market.

If we look at the spread between the forward P/E on quality stocks to that of the broader (world) market, we can see that it's the highest since at least 2013. The last time it got this high, quality went into a half-year funk relative to other stocks.