The market kicked off 2021 with some extremely strong action. That lasted for about three weeks and then was disrupted by the short squeeze drama, which turned out to be a good excuse for some much needed corrective action. That correction lasted for about four trading sessions, and now the market is acting just like it was about a week ago.
What is most notable about the action is the liquidity that is flowing into stock-picking, especially in small-cap names. Themes like special purpose acquisition companies, cannabis, small biotechnology, and gambling continue to attract interest and are showing few signs of slowing.
We have some big earnings hitting tonight and both Amazon (AMZN) and Alphabet (GOOGL) are seeing strong positive responses. Thus far this quarter, earnings have not been a driving force. Good reports have been sold and have not gained positive momentum. It will be an extra catalyst for the market if that dynamic shifts after the good reports tonight.
For months now, this market has offered some of the best stock picking in a very long time. It is very easy to conclude that it can't last much longer, but as we saw last week, this market can handle some disruption quite well. Stay focused on the themes and rotations. The FATMAAN stocks may even help out a bit after the reports tonight.
Have a good evening. I'll see you tomorrow.