Breadth on Monday was mediocre, with about 3,600 gainers to 3,200 decliners, but strength in the large-cap technology and FAANG names combined with some pockets of momentum in biotechnology and crypto/blockchain areas gave the action an upbeat and emotional feel. While the indices bounced for the fourth day, it was narrow action. Endless bitcoin media coverage helped to disguise the fact that it wasn't that strong of a day for most stocks.
Trading into the end of the year often has a more speculative tone as selective small-caps are chased. We had a good example of that today with names such as Overstock.com (OSTK) , U.S. Global Investors (GROW) , Seven Stars Cloud Group (SSC) and Riot Blockchain (RIOT) . It is frenzy like nothing I've seen since internet bubble.
There are plenty of well-meaning folks warning about the dangers in these stocks but for aggressive traders with good risk management there are some great opportunities. Although I have no confidence at all in the long-term future of these stocks, that has nothing to do with trading them short term. Yes, they are high risk but anything that moves this big is always going to care a lot of risk.
I'd like to see some speculative action broaden out a bit. The stocks that are moving are too small of a group. I see about 25 stocks that moved more than 10% Monday, which is a good number, but it was feast or famine for many small-caps.
Speculative action has a tendency to last longer than seems reasonable, but the weak breadth and narrowness is a concern. This market isn't going to run on bitcoin hysteria for long.
Have a good evening. I'll see you tomorrow.