The market's strong momentum continue today but the action slowed and there was some choppiness particularly in small caps. The DJIA had its first negative day of the year but a strong bounce by the Russell2000 ETF (IWM) pushed breadth into positive territory after a slow start.
Most notably today it was the big cap names turn to lead. Strength in the FAANG names -- Facebook (FB) , Amazon (AMZN) , Apple (AAPL) , Netflix (NFLX) and Alphabet (GOOGL) -- and other big caps such as Tesla (TSLA) , NVIDA (NVDA) and Arista Networks (ANET) were the driving force.
The small-cap speculation, that has been entertaining many traders lately, was much less robust. There were quite a few fades following early strength as traders were less inclined to pursue some of the riskier names.
There isn't anyone who would question the market's need for some rest and consolidation but the more important issue is how that may occur. The bears are hoping for a sudden collapse but that is very unlikely. What is much more likely is some choppy action and more rotation. We had some narrowing today as the big cap names grabbed the leadership role and that may continue as increased liquidity is embraced.
There are still quite a few promising charts out there and nothing overtly negative about this market. It is simply extended and that can be corrected without a major pullback. The trend may be a little extreme but it is still our friend.
Have a good evening. I'll see you tomorrow.