The action today was the tale of two very different markets. The DJIA and the S&P 500 looked listless as they traded essentially flat. Breadth was positive with around 3850 gainers to 3150 decliners but wasn't anything exceptional.
If you look at the Nasdaq and Nasdaq 100 (QQQ) the action looked much stronger and the FANG names -- Facebook (FB) , Amazon (AMZN) , Apple (AAPL) , Netflix (NFLX) and Alphabet (GOOGL) -- pushed the Nasdaq 100 to a 1% gain for the day.
However, where things really become interesting is if you look at some of the momentum in individual names. IQIYI (IQ) , for example, which I've been discussing for a couple weeks now, went parabolic and was up over 16% today. The stock has doubled since May 18.
There are always a few movers like this but there were far more than usual today with other bigger cap names like Etsy (ETSY) , Dropbox (DBX) and Sogou (SOGO) .
The hot action is primarily in cloud, Internet related and China names. The character of the action is completely different than what is occurring in the DJIA and other sectors such as financials and retailing.
The action was so hot in certain areas that I was surprised to hear a number of aggressive momentum traders talking about taking gains into the strength. These are traders that generally have no fear of heights yet they were worried that some stocks may be overheated.
How things develop from here is the big question. What the bulls need is for the action to broaden out and for the extended stocks to consolidate a bit. There clearly is a very big appetite for momentum names but the supply is fairly small. It isn't the healthiest way for the market to act but it sure can pay off if you are in the right names.
Have a good evening. I'll see you tomorrow.
