I have been writing this for quite a while now but the most notable characteristic of this market lately is that it is all about stock picking. The indices are struggling a little this morning and breadth is running 2900 gainers to over 4400 decliners but there continue to be very hot pockets of trading action. My list of stocks that are up more than 10% is too long to count and around 600 names are hitting new 12-month highs. SPACs continue to act like the second coming of the internet bubble and traders are digging deep to find the next mover.
There is concern that the SPAC names are too hot but as George Soros once said, "When I see a bubble forming, I rush to buy, adding fuel to the fire." I discussed his thinking in this article back in June.
My point is that I'm sticking with the strong momentum in the SPAC names and am going to try to ride them as far as I can. I find that taking some partial profits along the way helps to make it easier to hold on to a core position. The more extended they become the more volatile they will trade so it takes some extra vigilance to stay on top of them.
My biggest moving SPACs this morning are Trine Acquisition (TRNE) , which as my stock of the week two weeks ago, Northern Genesis Acquisition (NGA) , Foley Trasimene (BFT) , and my current Stock of the Week, GigCapital3 (GIK) .
At this point, I'm paying very little attention to the indices and am laser-focused on the momentum and sentiment in the hot pockets of the trading action. When that action shifts, then I will start to become more defensive but for now, I'm pushing and trying to stick with strength the best I can.
If you want to find a negative argument against this market it is easy to do. If you want to make some money with hot momentum that will take some work.