A bout of intraday selling shook things up a little Wednesday, but that isn't all bad.
The indexes and most stocks bounced back, but breadth finished slightly negative, and the Russell 2000 fund (IWM) lagged with a loss of 0.65%.
The pockets of hot momentum continued with cannabis names leading the charge, but bitcoin weakened, and the mighty Tesla (TSLA) had an ugly rollover on increased volume.
What continues to be most notable about the action is how fast liquidity is rotating into various small-cap "'junk." There was a long list again of 10% movers, but the quality of some of these names seems to be declining. All that matters to many traders in this group is enough other traders to keep buying them. In many cases (like Tilray (TLRY) ), there is a fantastic amount of sustained buying, so the game continues.
There is no question that some of the trading lately has become quite frothy and unsustainable, so some pullbacks and resets are not bad. The market is healthier when it goes up in fits and starts. Choppier action allows for stronger buyers to build positions.
Given how strong the market has been recently, a little selling isn't anything significant. But some bears are desperate for this uptrend to relent and tend to read more into some minor selling than may be warranted.
If the bears are going to do anything significant, they need to kill the high level of speculative trading and then need to produce some downside follow-through. So far, there aren't many signs of either.
Traders took some gains into strength Wednesday, which is a very logical thing to do, but they aren't turning into growling grizzlies. The trend is still to the upside, and stock picking is still the best approach.
Have a good evening. I'll see you tomorrow.