The S&P 500 and DJIA are in positive territory today on much improved breadth of around 5300 gainers to 2000 decliners. The primary driver for this action in the senior indices is optimism that a Brexit deal may finally be agreed upon. This has been dragging out for years but it now looks like it will finally be accomplished.
That news is helping the broad market, but under the surface the main focus is a continuation of the wild small-cap momentum that has dominated the trading action lately. Once again my list of stocks that are moving more than 10% today is several pages long and nearly 700 names are hitting new 12-month highs.
Traders continue to focus on SPACs, batteries, electric vehicles, cannabis, drones, and a variety of secondary stocks and sectors. The FATMAAN names are lagging once again and big-cap momentum names that usually lead are mostly underperforming. Bitcoin (GBTC) is a good illustration of the speculative fervor, it's around $23,600 and continues to attract strong buying interest.
Market players that usually don't focus on the smaller stocks are likely feeling left out but for aggressive small-cap traders like me, this is some of the best trading action in years. It is so good that it makes me a little nervous but the price action suggests that there is more to come.
I've been focusing on SPAC names I've mentioned in the past such as EOS Energy (EOSE) , Lordstown Motors (RIDE) , Social Capital III (IPOC) , and many others. Lithium name Lithium Americas (LAC) , which I mentioned again yesterday, is demonstrating sustained momentum, and some old favorites such as Xeris (XERS) and Pacific Ethanol (PEIX) are moving along nicely.
The gaming sector is doing very well and I'm adding to Bragg Gaming Group (BRGGF) which I recently highlighted as one of my top low-priced small caps for 2021. Earlier this week it announced an agreement to expand distribution of its various gambling content to 1000 betting shops in southeastern Europe. The chart is forming a nice looking flag pattern and I'm looking for a leg higher after the consolidation is complete.
It is an embarrassment of riches in small-cap names but the important thing is to not be complacent. The stocks are going to turn down quickly at some point but there is no way to know from what levels and when. Just be ready to react at some point.
