The market is dealing with some mixed action Monday, but in the context of the recent correction and bounce, it is not negative.
Market participants are trying to sort out the next batch of winners from the overbought leaders that may struggle going forward. There is some good stock-picking out there, while the technology leaders and growth names are struggling.
One of the more interesting sectors right now is special purpose acquisition companies. SPACs have had a very interesting journey in recent months as they went from euphoria in February to a complete disaster a few months later. Almost no pre-deal SPAC was trading much abovr its redemption value for a while, and many had substantial discounts that invited aggressive arbitrage.
In recent weeks there has been very aggressive trading in certain SPACs that have very small floats due to high levels of redemptions. Social media has been aggressively trying to trade these names. There have been some big spikes in names like Ironnet (IRNT) and Helbiz (HLBZ) , but they have been of very limited duration and have trapped many slow-moving traders that joined the party too late.
In addition to the trading games in some of the secondary SPACS, the market has started to embrace some of the quality names. In recent weeks, SPACs like Ginkgo Bioworks (DNA) , Lucid Group (LCID) , and DMY Technology Group (DMYI) have started to attract investors that are buying them based on fundamentals and individual merit. I believe this is a theme that is going to continue, and we should see interest in more names that are starting to shake off the stigma of being a SPAC. The SPAC name carried a negative connotation, but there are some exceptional companies that have used this route to the public markets, and they will eventually be discovered.
I own DNA and DMYI, as well as GENI, RSI, and a few others. I'm looking at QSI and DCRC and feel that there are still a number of bargains in the sector. Once the arbitrage and the overhang of the PIPE start to unwind, then strong fundamentals should be rewarded.