The market action was downright frothy this morning after a strong open and some big moves in semiconductors and biotechnology names. Breadth was solid but not spectacular, but more than 750 stocks hit new 12-month highs, which illustrates how many stocks were making big moves.
What was most notable about the action today was that it was more stock-driven than index-driven. In fact, the FAANG names underperformed today with big-caps like Apple (AAPL) , Alphabet (GOOGL) and Amazon (AMZN) finishing in the red.
The action today was driven by individual stocks like Nvidia (NVDA) and Ultra Clean (UCTT) gaining further momentum after sizable gains last week. The ability to build this sort of momentum is impressive and gave the action a frothy feel. (Apple, Google and Nvidia are part of TheStreet's Action Alerts PLUS portfolio.)
Perhaps it was a sign of being overheated as a pullback occurred in the middle of the afternoon, but there was a bounce into the close that prevented any major damage. The buyers were not interested in the Nasdaq-100 ETF (QQQ) names, but they did keep a bid under the Russell 2000 ETF (IWM) and the S&P 500 stocks.
At this point, we have many stocks that are overbought and we have the FOMC interest rate decision coming up on Wednesday. The bears are also hopeful that the negative seasonality will still impact the market, but performance anxiety is preventing any real downside.
I cut some of my long exposure into the strength today, but I'm not ready to call a market top. Being disciplined in managing positions doesn't mean you aren't still looking for new buys. This is an uptrend and there is no sign of it ending yet.
Have a good evening. I'll see you tomorrow.
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