Doug Kass is fond of saying that the market has no memory from day to day, but it looks more like this market is out to punish anyone that dares to be bearish.
There was an argument to be made yesterday that the big intra-day reversal was a bearish development that signaled that a change in character was brewing, but there was barely a hint of downside follow through. As I discussed yesterday betting on downside momentum or that the dip buyers wouldn't show up has been a losing trade for a long time.
The indices are back to highs and momentum very strong which leaves us with little choice but to embrace the trend the best we can. Momentum players were piling into the semiconductor group today following strong earnings from Dutch chip play ASML Holdings (ASML) . The VanEck Vectors Semiconductor ETF (SMH) broke out to a new high and there was some frenzy in the group.
One important thing to keep in mind about this market is that it is the rotation into new leaders that keeps pushing the indices to new highs. The FAANG names -- Facebook (FB) , Amazon (AMZN) , Apple (AAPL) , Netflix (NFLX) and Alphabet (GOOGL) -- were not particularly strong today although Apple did some heavy lifting after news of major investments in the U.S. over the next five years.
The cryptocurrency group found some support after ugly early action and was well off the lows but the volatility there is going to continue. The bears that predicted disaster were doing high fives but astute traders shrugged and were pleased to see a good shakeup in the group.
Earnings season is heating up fast and expectations will be high but fear of missing out is the dominate force right now. If the bears can't manage to build on weakness like we had yesterday why should they be any concern at all?
Have a good evening. I'll see you tomorrow.