For the last couple of weeks, the most notable characteristic of the market has been its narrowness. The indices have been hitting new highs, although breadth was quite week. It was mainly the FAANG names that were responsible for the record highs in the indices.
Yesterday and today, that has been shifting. The FAANG names are lagging, while traders are picking at many of the individual stocks that have been laggards. Rather than chase the big-cap momentum names, they are focused on finding opportunities under the surface.
Breadth is still weak, with around 3050 gainers to 3350 losers, but it is more representative of what the indices are actually doing. The number of new highs is down to just 115, which is an illustration of how quickly momentum has cooled.
I have quite a bit of positive action on my screens, with things like Overstock.com Inc (OSTK) , Alibaba Group Holding (BABA) , Action Alerts PLUS holding Nvidia Corp (NVDA) , Sangamo Therapeutics Inc (SGMO) , 58.com Inc (WUBA) and Sarepta therapeutics (SRPT) doing well.
We have shifted from a market that was mainly index driven by the FAANG names to one where stock picking is more important. That gives the action a more rational feel and is a refreshing change. While the indices are not acting that well, the interest in individual stock picks indicates that the market is still quite healthy.