Last week I warned viewers that the selloff in stocks was the real deal. Yesterday we just had the biggest rally since March. The Nasdaq is barely 1% away from its record. Was that it for bears? Another short-lived and futile attempt to steal the show? Here are a few things to watch: 1) Bitcoin. Tuesday’s bitcoin bounce was pretty weak compared to the explosive move in stocks. Crypto is the highest-beta risk asset in existence and to see bitcoin’s 24-hour move just a percentage point or two above the Nasdaq’s is odd. The S&P and Nasdaq bounced right back into the top of their trading range the past month, but btc can’t seem to gather enough momentum to close Friday’s big gap in futures. I’ve written here plenty about why a hawkish Fed is the Achille’s Heel to bitcoin’s momentum; perhaps we’re seeing that in action. But that doesn’t exactly fit with the fact the biggest winners in Tuesday’s stock market were expensive, profitless growth companies.

2) The Russell 2000. Small-caps faded a bit in the second half yesterday and are still trading in a completely unique way relative to the rest of the stock market. After a false breakout at the end of last month, the ever-trusty Russell is back in a trading range that’s held since February. One small thing that could be bullish: the Russell found buyers around 2150 in this latest drop, 50 points above the bottom from that year-long range. That suggests buyers were more eager to step in this time. If the Russell gets back above 2330, the high from two Fridays ago, that would be very bullish.

If that support becomes resistance to the upside, this group is going to be in trouble. 4) Bonds. Of course, always, bonds. More specifically, whether the yield curve widens out. People are already building a narrative that Powell was merely flexing last week and will still be very patient. If this is the case, you’d expect the yield curve to widen out. It’s not. I would be suspicious of big equity rallies that don’t also include curve widening, which is what we got Tuesday.

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