For stocks, is this as good as it gets?
The market staged a powerful rally Tuesday, with the S&P 500 hitting levels not seen in weeks. Again. Here's what to watch for next.
By Alexandra Twin, CNNMoney.com senior writer

NEW YORK (CNNMoney.com) - Awfully nice rally on Tuesday. But there's something awfully familiar about it.

In fact, it feels like the major gauges were at the levels they hit Tuesday just a few weeks ago. Not to mention a few weeks before that.

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This could speak to the resilience of the stock market, or it could suggest that the market is in the process of "topping out" -- in other words, the recent rally may be over.

"Markets don't make a top and then slide, topping is a process," said Barry Ritholtz, chief market strategist at Ritholtz Research. "Typically markets make an initial top, back off, try to surpass it, and can't do it."

This process repeats itself a number of times until the market stops trying to surpass that earlier high.

That high may have been hit near the end of March or early April, which would mean that this current advance is as good as it's going to get for the major gauges for a while.

That's not to say that the market is likely to fall sharply from here on out, or that select sectors won't thrive. But there are plenty of reasons to argue that the best days are over for stocks, at least for now.

But wait, the Dow industrials just soared 195 points, you say. And minutes from the most recent Federal Reserve meeting seemed to imply that rate hikes are nearly over.

Both are true.

But the near-term threats to stocks are equally apparent despite Tuesday's 'what, me worry?' rally.

Crude oil prices hit record highs near $71 a barrel for a second day running Tuesday on worries about Iran's nuclear capability and other disruptions to global supply. The 10-year note yield recently hit 5.05 percent, the highest in nearly four years. And gold is above $620 an ounce, a 25-year high, as investors seek a hedge against inflation.

In particular the one-two punch of higher oil and rates could slow economic growth, which could hurt corporate earnings, thereby making stocks less attractive.

Technical market factors also suggest the market has peaked. And there are seasonal factors that make the next six months tough for stocks, regardless.

Stocks have little support

The Dow hit its 2006 high on March 22, closing at its best level since May 2001. The Nasdaq's best close came on April 6, its highest since Feb. 2001. But even after Tuesday's rally, the two major gauges remain below these highs.

The S&P 500 hit its 2006 high on April 5, closing at 1,311.56, its best level since May 2001. And it's going to have a hard time surpassing that level and moving higher.

"There's long-term resistance for the S&P 500 around 1310," said Katie Townshend, chief market technician at MKM Partners. "It certainly feels like we've topped out," she added.

Why is that?

First and foremost is the age of the bull market, she said, which dates to when the major gauges hit bottom in October 2002. At 3-1/2, the current bull is one of the oldest on record. In fact there are only five in history that have lasted longer than the current one, according to the Stock Trader's Almanac.

As the bull has gotten more mature, it's lost steam. "The most recent push to new highs was with far less momentum than what we saw earlier in the advance," Townshend said.

The most recent leg of the rally has also seen retail investors jumping in at the strongest pace in several years. And while that would seem to be a plus for stocks, it often means the best of the run is over.

Still, these factors don't suggest an immediate sell off, as the S&P 500 could easily flip-flop, retesting the recent highs a few more times.

But beyond the short term, a big correction looks to be brewing, Townshend said.

'Tis the season to be falling

There's also the matter of seasonal factors, all of which are pretty gloomy.

For one thing, stocks tend to do poorly in the second half of April, following the income tax deadline, according to the Stock Trader's Almanac. That then leads into the period in which, as the old Wall Street saw says, one may want to "sell in May and walk away."

Additionally, the market often peaks in March or April period, according to the Almanac. There are concerns that 2006 may follow suit, said David Briggs, head of equity trading at Federated Investors.

Plus, market historians who think the market follows the four-year cycle of the presidency say that in year two (read 2006), the market often peaks in the first half before bottoming later in the year.

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Playing the expected stock market storm. For more, click here.

A tough six months may be on tap for stocks. For more, click here.

Retail investors are rushing in. Uh oh. For more, click here.

You may want to 'sell in May and walk away.' For more, click hereTop of page

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.