THE FIRST QUARTER WASN'T THAT BAD FOR STOCKS -- THE VANGUARD TOTAL STOCK MARKET ETF LOST LESS THAN 1% -- SOCIAL MEDIA ETF IS BOUNCING OFF CHART SUPPORT -- SO IS AN ETF OF BANK STOCKS -- GLOBAL X COPPER MINERS ETF BOUNCES OFF ITS 200-DAY AVERAGE

VANGUARD TOTAL STOCK MARKET ETF LOST LESS THAN 1%... Despite all the volatility during the first quarter, the first three months of 2018 weren't really that bad. The Dow Industrials were the biggest losers with a quarterly drop of -2.5%. The broader S&P 500 Index lost only -1.2%. While the tech dominated Nasdaq Composite gained 2.3%. Small caps saw only a marginal loss (-.40%). The daily bars in Chart 1 shows the Vanguard Total Stock Market ETF (VTI). As its name implies, the VTI captures the entire stock market by size (large, small, and midsize) and by style (growth and value). And it lost only -.71% from the end of December to the end of March. The flat red line shows what the market did since the end of December. And it shows only a minor loss. Which brings us to where it is now. The good news is that technical odds favor a bottom being formed. Corrections usually take place in three waves (first downleg, a recovery, and then a retest of the prior low). So far, that retest has been successful. The VTI has remained above its 200-day moving average (red arrow) and its February low. Short-term indicators are starting to look better. The 9-day RSI line (top box) is rebounding from oversold territory below 30 for the second time. MACD histogram bars (lower box) are still below their zero line, but remain well above their February low and are starting to climb (see rising trendline). Both of which suggest that the worst of the current correction may be behind us.

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Chart 1

SOCIAL MEDIA ETF IS BOUNCING OFF CHART SUPPORT... A lot has been written about the downturn in technology stocks over the past couple of weeks. Some of the biggest losers in the so-called FAANG stocks saw nice gains on Thursday and led the market to a strong close for the week. Some of the biggest bounces came from Facebook (4.4%) and Alphabet (3.1%). Apple also regained some lost ground. Amazon.com (AMZN) and Netflix (NFLX) recovered from early selling to end the day higher. As a result, the Nasdaq was the day's strongest index. Social media stocks have accounted for much of the recent tech selling. The daily bars in Chart 2, however, show the Global X Social Media ETF (SOCL) bouncing off chart support at its early February low. And it remains well above its 200-day average (red arrow). That looks like a normal downside correction in a rising trend.

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Chart 2

BANKS SPDR IS ALSO BOUNCING OFF SUPPORT ... Financial stocks, and banks in particular, have also lost ground during March. But not enough to reverse their major uptrend. The daily bars in Chart 3 show the S&P Bank SPDR (KBE) also bouncing off chart support along its early February low. It too remains well above its 200-day average (red arrow). Financials are the second biggest sector in the S&P 500 (behind technology). That's why it's encouraging to see banks and social media stocks starting to bounce together from underlying support levels. There's also an old saying in technical analysis which is that an existing trend is more likely to resume than reverse. So until proven otherwise, technical odds favor those support levels holding.

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Chart 3

COPPER MINERS ETF BOUNCES OFF 200-DAY LINE... Shares tied to industrial metals have fallen along with those economically-sensitive commodities during the first quarter. But, there again, things may be taking a turn for the better. The daily bars in Chart 4 show the Global X Copper Miners ETF (COPX) bouncing off its 200-day moving average yesterday (red arrow). Its ability to stay above its February low also suggests formation of a bullish "symmetrical triangle". That pattern is defined by two converging trendlines and usually signals continuation of its main uptrend. Freeport McMoran (FCX) gained nearly 5% on Thursday and was the biggest percentage gainer in the Materials Sector SPDR (XLB). That may also be a sign that industrial metals like copper may start to strengthen again as faith in the global economic recovery is restored.

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Chart 4

NYSE ADVANCE DECLINE LINE IS HOLDING UP BETTER THAN STOCKS ... Another positive sign working in the stock market's favor is that market breadth is holding up even better than stocks. At most market tops, the NYSE Advance-Decline line usually turns down first and leads the rest of the market lower. That happened during 2007 and again during the second half of 2015 when the NYSE AD line fell to the lowest level in two years. This time, however, is different. The green line in Chart 5 shows the NYSE Common Stock Only Advance-Decline line going through a relatively mild pullback during the first quarter (with its converging trendlines forming a triangular consolidation pattern). Chart 5 also shows it holding up much better than the Vanguard Total Stock Market ETF. [The other version of the NYSE AD line that includes everything traded on the big board is in a similar strong situation]. That's a strong argument in favor of the first quarter volatility in stocks being a normal market correction in an ongoing uptrend. It also increases the technical odds for continuation of the market's nine year bull run. And for a better second quarter.

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Chart 5

HAPPER EASTER AND HAPPY PASSOVER ...