Typically when everyone agrees that the market should do something, it is less likely to occur. That has been the case recently as far as dealing with overbought and extended technical conditions. Despite how obvious it has been that the market needs a rest, it has persisted with a strong uptrend.
The corrective action finally did pick up traction on Tuesday, and poor reaction to some major earnings reports from the likes of Coinbase (COIN) and Upstart (UPST) weighs on the market this morning. There is nothing particularly unusual about this selling pressure so far, but it does create some much-needed worry and doubt.
There will be much focus today on the Rivian IPO (RIVN) , which was priced last night at $78. The company has yet to start production but is backed by Amazon (AMZN) and Ford (F) , and is attracting substantial interest. High-profile IPOs are often viewed as potential market turning points, so it will be interesting to watch overall market action once RIVN is open for trading.
While the indices and many individual stocks are extended and in need of a rest, there continue to be pockets of very strong speculative action. That is the key to the overall market. As long as that speculative appetite continues, it will provide underlying support. The buying interest is going to shift around quickly and bubble up in different places on a daily basis, but the important thing is that it isn't going away.
Conditions are very good for this speculative interest to continue into the end of the year. This has nothing to do with the few big-cap names that drive the indices. It is all about sectors and themes and is largely driven by retail money. When that speculative interest dries up - as it did back in late February - then it will be time to be more cautious.
So far, there are no signs of slowing speculative energy. It actually is healthy if the indices and some growth names deal with overbought conditions.
Cryptos are taking a rest this morning, and all the indices are indicated lower as we await some economic data. Keep an eye on price action in individual stocks.