Some late movers due to index rebalancing and option expiry triggered profit and took the indices off their highs. Despite the late dip there were two themes that lit a fire under the market today. First was the steady trickle of news confirming that the Republicans have the votes to pass the bill that will be presented this evening. Both Senators Rubio and Corker came around and the should be sufficient to seal the deal. The final vote won't be until next week but the market was celebrating the passage once again today.
The other theme today was positive seasonality in small caps. Much of it was in the bitcoin-related plays like Overstock (OSTK) which was my Stock of the Week and made a 50% move this week. Others names like Seven Stars Cloud (SSC) , LongFin (LFIN) and Riot Blockchain (RIOT) helped to make for a festive atmosphere.
It wasn't just the crazy names that moved today. Breadth was very strong as it approach nearly 3 to 1 positive but new 12-month highs were fairly sedate at around 400. It was very broad strength but I have to wonder what is going to happen when this tax bill is finally passed and we can't rally on those headlines again.
I believe it is likely that the wild trading in the bitcoin/blockchain group will continue for a while. Too many 'experts' fail to understand that a lack of intrinsic value has nothing to do with the price. This is trading based on emotions and psychology rather than fundamentals. They are totally separate things.
Looking ahead we should see increased volatility in the indices as the tax bill euphoria cools off but some good pockets of trading action as speculative traders look to take advantage of positive seasonality for small caps.
Don't be dogmaticly bearish or bullish. This will be market action for the opportunist.
Have a great week and get that shopping done. I will see you on Monday.