The Market's Heading to Never-Never Land

I must have heard the word "resilient" with regard to the market half a dozen times as the market rallied Wednesday.

And all I could think of was back in 1989 there was a cartoon about how resilient the Japanese market was. (For those who don't remember, the Japanese market made its all-time high in 1989.) Well, I have a bulletin board that sits on the edge of my desk with the market cartoons I've collected over the years, so I went in search of that particular one. I couldn't find it, but my eyes came across another one that I found even more appropriate.

Lately we keep hearing many of the bears (myself included) listing all these negatives about the market.

The technicians list the divergences.

The fundamentalists discuss the yield curve and bird flu and the Middle East situation among the many reasons for the market to be down. So I could not help sharing this particular cartoon with you.

It has Peter Pan flying away and he has Wendy behind him. Peter Pan is saying, "I'm taking you to a magical never-never land that is unaffected by events in the real world." And Wendy responds by saying, "We're going to Wall Street?"

And that about sums up the current sentiment on Wall Street!

Wednesday's rally had less volume than we saw on Tuesday. It had fewer new highs -- and by a wide margin -- than it had even the day before. Even the advance/decline line was less than it was the day before despite the fact that the S&P 500 was down 7.85 Tuesday and up 7.81 Wednesday.

And over on the Nasdaq (where the new highs also shrunk), the new lows even expanded.

The big difference remains that the mid-caps are underperforming the big-caps.

The S&P Midcap Index is at 780, pretty much where it was in early February, while the S&P is at 1305 vs. 1290 in early February. Folks continue to focus on many of the defensive names, as evidenced by the fact that Wednesday was not just all about the drugs (thanks to Bristol Myers (BMY - commentary - Cramer's Take)); General Mills (GIS - commentary - Cramer's Take) and Colgate (CL - commentary - Cramer's Take) were up big as well.

The chart of the ETF for the consumer staples group continues to move up out of its base, and those big-cap consumer stocks continue to outperform.

In the meantime, we're still heading for an overbought reading on Friday.

Overbought/Oversold Oscillators

For more explanation of these indicators, check out The Chartist's primer.

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At the time of publication, Meisler was long Bristol Myers, although holdings can change at any time.

Helene Meisler writes a daily technical analysis column. Meisler trained at several Wall Street firms, including Goldman Sachs and SG Cowen, and has worked with the equity trading department at Cargill. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. She appreciates your feedback; click here to send her an email.