A hot air balloon is made of a fabric gas bag (envelope) with an opening at the bottom. Attached to the envelope is a basket that carries passengers.

The burner, fueld by propane, injects a flame which heats the air within.

Hot air balloons cannot fly beyond the atmosphere.

Much the same can be said about the current market rally.

The envelope or fabric of the rally is buoyant. The market’s basket holds lots of bullish passengers.

The gas-filled burner gives the market lift. Some instruments have more gas than others.

Some instruments fly higher than others.

Since hot air can only carry the market so high, how much hot air is left?

In the photo, taken in Albuquerque, New Mexico, one balloon soars much higher than the other.

The higher balloon looks like Nasdaq and the FANG stocks.

Netflix flew over 6% higher onto new highs. Is it possible Netflix can fly beyond the atmosphere?

Facebook and Google are passengers in the Nasdaq balloon as well.

Amazon paused ahead of its earnings. However, it does not seem to be weighing down the other passengers or Nasdaq.

The lower balloon barely clears the smoke stack.

Might that balloon represent retail stocks, trying to fly yet pathetically underperforming?

Or, perhaps it represents commodities that have just enough hot air to get them and their passengers off the ground.

However, since most are now oversold, if that balloon runs out of gas, the fall to the earth is not so far.

These two balloons illustrate the current scenario.

The Tech and Nasdaq stocks fly closer to the atmosphere they may not be able to pierce. The retail stocks and commodities are so oversold, they barely fear any further drop.

At this point, I prefer to look down and see the ground closer. Way up there, vertigo could set in.

My prediction-the Russell 2000 takes out the top of the channel on the monthly chart at 141.50 area. Maybe it flies as high as 143 level.

But then, should the price of IWM return below 140 either at the end of April or sometime in May, I’d make sure the passengers have on their flame-retardant clothing.