The National Assembly election in France is receiving the credit but market strength this morning looks more driven by a combination of buy programs and short squeezes. This market has not needed headlines to move and that seems to be the case again today.
What has made things difficult for many traders is there is no real correlation between price action and headlines. While there may be a short-lived response to news like the Fed "normalizing" its balance sheet it doesn't last long and it is easy to be caught leaning the wrong way if you press in hopes of catching a fundamental theme.
This morning we've reverted to leadership by the FAANG names and big-cap momentum while small-caps lag slightly. Breadth is better than two to one positive and the number of new 12-month highs is back up to around 340 as the momentum names act better.
Both Health Innovations (HIIQ) and Impinj (PI) are reversing after breakout moves on Friday but names such as Alibaba (BABA) and Amazon (AMZN) are chugging along. This is what happens when computerized programs are at work. It is simply rotation and another example of how this market is driven by price action more than anything else.
There are some reversals now as I write and market players will be focused on the early lows as key support.