Stocks were ready for some sort of rest or corrective action and a couple of big initial public offerings provided a good excuse. DoorDash (DASH) and C3.ai (AI) traded way above their offering prices and sucked up much of the liquidity and momentum that have been driving many other stocks. The special purpose acquisition companies continued to attract interest, but were quite volatile intraday with several abrupt reversals.
Breadth started strong, but faded steadily and ended the day around two-to-one negative. The FATMAAN names all finished in the red, technology was generally weak, and financials reversed slightly. There wasn't any panic selling and most names remained above key support levels. Overall it was just some healthy profit-taking in the context of a strong uptrend.
Thursday we have the Airbnb IPO, and that is going to suck up more liquidity, but it appears that buyers are lurking under the surface and are just waiting for some entry points. My feeling is that the speculative action is far from over. The big IPOs were a distraction and provided an alternative for some cash, but they should be digested fairly fast.
When IPOs like DASH and AI can trade so far above their offering prices, there must be some substantial demand out there. That demand is not being sated and is going to flow back into some of the stocks that dipped today. The positive seasonality is another plus that should help to keep this positive uptrend on track.
The bears are often inclined to quickly jump to the conclusion that minor weakness is the start of something much more substantial. While that is possible, there wasn't any compelling evidence to support the argument that this market is topping.
Have a great evening. I'll see you tomorrow.
