The Dow Jones Industrial Average finished Wednesday with a gain of 0.09% and the S&P 500 was down 0.28%, which would seem to indicate a mild or even a boring day. However, under the surface there was chaotic action.
There were two main themes to the market today. The first was mild speculative action in cannabis stocks such as Tilray (TLRY) , Cronos Group (CRON) and Canopy Growth (CGC) . They all swung around wildly and prompted comparisons to the internet bubble in 1999-2000.
The other main theme was broad weakness in technology stocks. The Nasdaq and Nasdaq 100 lagged the broader market badly, with respective losses of 1.2% and 1.3%. If you want to know the main reason just look at the FAANG names, which are significant weighting in both indices.
It wasn't just the big-cap technology names that were hit, however. Many small-cap names that have been doing well suffered significant losses and caused some moaning and groaning among traders. The social media plays, namely Facebook (FB) and Twitter (TWTR) , didn't run into any major issues in Wednesday's congressional hearing, but the stocks were dumped in the technology carnage and finished at the lows of the day.
Overall the indices remain in good shape and the uptrend firmly intact but the underlying action, particularly the weakness in the technology sector, is reason for concern. I am not interested in trying to make a major market timing call, but I did raise some cash today and added some index shorts. I'm preparing for a bumpier ride in the next few days but I suspect I will be looking to do some new buying very soon.
The important thing right now is to keep portfolios close to highs and be ready to take advantage of any softness that may ensue.
Have a great evening. I'll see you tomorrow.