Small-cap corrective action is picking up some traction this morning, and there is some fallout in sectors like oil and pharmaceuticals as new Biden regulations are moving forward.
Speculative stock picking has slowed substantially with just a couple dozen 10% movers this morning. There still is some rotational action into big caps, but it has slowed. Overall breadth is solidly negative as it approaches two losers for each gainer. The new highs are still good at over 600, but many of those reversed following the opening prints.
This looks like consolidation after a big run rather than a major shift in market character. The market is trying to decide on new leadership going forward, which tends to be a bumpy process. Small caps have been overheated for a while and need some rest, but I do not think that small investors are going to suddenly disappear. They will make another run once things develop.
One bigger cap name I added this morning is Snap (SNAP) , which should benefit from further rotation. My favorite SPAC, Foley Trasimene (BFT) , continues to act well, but there is a sea of red on my small-cap watch lists right now. It isn't too worrisome at this point, but if it persists, we will need to take stronger defensive action.