Traders are feeling miserable Thursday as the S&P 500 and DJIA hit new all-time highs, but favored sectors such as biotechnology, gambling, SPACs, electric vehicles, solar energy, cannabis, and many growth names held by ARK Invest are wallowing in bear markets.
The mainstream business media seems to be oblivious to the two-tier nature of the market. All that they see is a steady trend higher and new all-time highs. If the indices were confirming what much of the rest of the market was doing, it would have a dramatic impact on sentiment. Instead, traders feel like they are underperforming to a much greater degree than they really are.
If the entire market was in a bear market, then the strategy for dealing with it would be extremely obvious -- cut losers, raise cash, and stand aside until there is better price action. However, if you look at the S&P 500, this is not even close to a bear market, so there is hesitance to take the normal defensive action that many took in a real bear market, as we saw in March 2020.
This is a highly annoying market for many traders right now since so little is working, and the indices fail to reflect the reality of the market.
My best advice is to recognize what is going on and to appreciate the fact that the indices just aren't a very good gauge of what is happening. Stay patient and keep working on building shopping lists. I can guarantee that the price action will eventually shift and that "good" stocks will come back. I don't know when that might occur, but I can assure you that it eventually will. In the meantime, make sure you protect precious capital as best you can.