I have written often about watching for a change in market character to signal a shift in our approach. The change over the past two weeks has been the most dramatic in many years. The explosion in volatility has created a huge number of new opportunities. Many market players are struggling to adjust and that is helping to make things even more volatile.
What is of particular interest today is how the 'hot' CPI number, which confirms one of the reasons behind the recent corrective action, has helped to produce a squeeze instead. We are back to 'fear of missing out' action and some downright frothy action in place.
Technically it is hard to believe that this bounce is going to continue to run in V-shaped fashion. The S&P 500 is still substantially off its January highs and there is plenty of resistance but the bears have been caught by surprise and they are being run over for now.
The action today has the feel of what was happening when the indices were at all time highs at the end of January. Breadth is very strong and there is aggressive chasing. I don't' think this is going to last, but you have to stay with this strength the best you can when it is operating like this.
I mentioned biotechnology as a group I liked yesterday and they are on fire today. Sangamo (SGMO) , Sorrento (SRNE) and others are breaking out. Names like Tabula Rasa Healthcare (TRHC) , Iovance (IOVA) and HTG Molecular (HTGM) have stellar momentum. It is almost a little too hot but this market's willingness to shrug off the CPI report is bringing in some money anxious for exposure.