The market is experiencing another round of sector rotation as a trading range develops. The major indices bounce off their lows as money rotated back into value plays like banks and industrials, and out of biotechnology and technology. The growth names have led the move off the March lows but there is concern that the action has become too frothy. Other sectors of the market are close to a retest of the March lows and those are the groups that the value players are watching today.
Typically, value plays have very unattractive charts. Banks for example, look like they are destined to retest the March lows but they are bouncing today as many have become oversold. While it is possible that they are not going to sink again, the charts suggest that once the oversold conditions are relieved, the selling will quickly resume.
It is interesting that most of the bounce today is a function of the value plays rather than the growth names that have recently done so well. This suggests that we are in for a period of trading range action as the battle between growth and value develops further. The good news is that there is still good liquidity but it is shifting around quickly.
A new name on my radar today is Forum Merger (FMCI) . The company is what is known as a SPAC which stands for Special Purpose Acquisition Company. The goal of FMCI is to acquire companies with innovative products that are aligned with food trends. The company has indicated that it has entered into a 'letter of intent' for a significant acquisition. There is speculation it may be a company that competes with Beyond Meat (BYND) . It is not known if or when a deal might be made but speculative traders are placing their bets on the news.
With the potential for trading range action to continue, I'm digging for some fast trades. I still so no reason to even think about longer term buys.