Winners win and losers lose.
That's the best thing I can think of when describing this market. Find what's winning and stay with it until it stops. As I've seen before, this will often take you outside of what you believe logical in terms of valuation or the possible momentum power in price action.
This isn't to say some bottom fishing hasn't worked, but it's been a slower, tough game. Believe me, I've tried. Bottoming patterns have changed a bit versus the past few years. I'm seeing much longer base times or drops that extend deeper than I've seen. Myov Sciences (MYOV) is a great example of a stock dropping significantly deeper than what appeared logical based on its news. There's no way it should have traded below $14, but it did. The stock made a "fast" bottom, but only if you were in on day three of the drop. Otherwise, you probably experienced a very uncomfortable drawdown or were stopped out from the position.
Immatics (IMTX) required months to bottom. And the first two attempts wound up being fake outs with new lows to come only a few weeks after bottoming patterns that have been very reliable in the past. Even now, July buyers are only flat or slightly positive even after a huge market run. I did manage to catch a recent turn on this one after two previously unsuccessful tries. I still hold a position that is slightly red, but I've jettisoned all my trading shares as there are simply other names and other sectors moving quicker.
Despite being a net seller today, this is still the bull's game. That being said, this seems like an easy place to take profits. All a trade needs to do is watch the highs from the past few days as a trigger to get back into a position. There's this misconception that one must not only sell at the top, but if they rebuy a position, they must do so from a lower level. That's simple wrong. A trade is a trade. Sometimes trades come from higher levels and work out better than the original trade. Really, all we're doing at that point is paying more because we have more information. That is if more information leads to a higher probability of success or a clearer stop/exit level.
And given the hesitation in seeing any kind of stimulus package make true headway plus Europe starting to close its doors among the current Covid-19 outbreak, it makes logical sense to take your foot off the gas here. Again, I'm not advocating taking short position, but a little extra cash may be a good thing. Remember, we are beginning to roll into earnings season as well. Tonight, we won't see anything too major as really only United Airlines (UAL) will make a splash. Tomorrow, we'll hear from Taiwan Semiconductor (TSM) , but things don't really pick up until next week.
One easy way to tell that the SPAC market is in a rut that may be longer and deeper than most think is by watching the action today. The EV market names are up huge with longs of double-digit percentage moves, but the EV-related SPAC names are struggling. I'm stopping short of declaring the group dead, but it is dead from a momentum perspective for the foreseeable future, so keep that in mind as you search for opportunities.