It was a sluggish session overall yesterday, but breadth pointed to core strength and we learned a couple of things about the market and investors.

The first had to do with leadership. The market has been riding the coattails of technology for years, especially in 2017 when just five names accounted for the majority of overall gains. But lately, we have finally started to get a glimpse into the possibilities of a rally composed of different leadership.

  1. Investors don’t have to run to the sidelines once they ring the register on technology.
  2. The herd is large with little critical thinking, although it can be nimble when spooked.

Case in point, there were only two losing sectors yesterday: my beloved materials and technology. Sharp declines on big volume in tech underscore the notion that the momentum crowd doesn’t ask questions on the way up or down.

It was brutal.

On the other hand, market breadth was essentially bullish as it pointed to core strength in leadership names.

The NYSE saw more winners than losers as 166 names hit 52-week highs while only 57 hit new lows. And while the NASDAQ had fractionally more losers than winners, there were 275 new yearly highs against just 31 lows.

There is a lot of talk about rotation, and the NASDAQ took it on the chin. I have to say, though, that over the last three months it hasn’t been the most dazzling index. The Russell 2000 has gotten some attention, but it’s those brick-and-mortar retailers that have rocked them all.

The big question now is whether this market rally can continue without tech. It’s hard to imagine going from the locomotive to the caboose, but I do expect to see some more pressure.

In fact, we saw that this morning as reports out of Asia indicated that Apple (AAPL) has warned its suppliers of a 20% decline in new iPhone parts orders. We’ve heard this before and almost every time the reports proved to be incorrect, but it’s still adding to the pressure today.

Overall it’s been a strong week for the market, so yesterday’s weakness and the early-morning pressure today are needed to test the resolve. For the Dow Jones Industrial Average, there could be a test of 25,000 as support since it has been such an important technical number. However, I don’t think that happens as money rotates into blue chips and value.

As always, I’m on the lookout for that value. This market is open to anyone who wants to be part owner of great American businesses, and even some great non-American businesses, too. That’s why we’re here, and we’re seeing the results.