The DJIA, S&P 500 and Nasdaq closed relatively flat today but there continues to be very chaotic action under the surface with the Russell 2000 ETF (IWM) hitting all-time highs with the Nasdaq 100 ETF (QQQ) struggling to hold some key support levels.
The themes that have emerged following the election are extremely clear with financials, biotechnology and infrastructure leading, but some of the moves are puzzling and that adds to the confusing feel of the market shippers. Shippers like Dryships (DRYS) , for example, have been on fire, while Amazon (AMZN) has acted like death. There are some explanations for these moves, but they aren't very convincing and many traders are looking for some very sharp reversals.
One of the keys to effective trading is identifying themes. In the current market, there are almost too many and they feel too crowded and obvious to last much longer. Momentum is driving them at this point and they are probably being helped by limited trust, but this isn't a normal market environment.
The rotations that are taking place are extremely significant, but they have occurred so fast and hard that the potential for another big bout of volatility is quite high.
I've heard a number of traders say this is one of the most confusing markets they can remember. That sentiment hasn't been voiced that loudly because it has been positive for the most part, but the level of confusion out there is high regardless of the fact that the indices are in generally good shape.
The momentum is still quite positive but the confusion of market players is going to come into play soon.
Have a good evening. I'll see you tomorrow.