Following two big days of outperformance by small caps, the market reverted back to big-cap technology leadership. Apple (AAPL) , Microsoft (MSFT) , Nvidia (NVDA) , and the usual names jumped higher after a couple of days of weaker action.
The Russell 2000 lost about 0.5%, but there were signs of dip buying, which took the index off the lows. The narrower leadership was reflected in breadth, which was negative early in the day but finished with around 4,400 gainers to 3,650 losers.
Pockets of speculative action were thin, with only about 30 stocks gaining more than 10%, but there is more focus on stock picking. Good charts are working better, and there is increased interest in finding smaller stocks that may be good values.
The market mood is very upbeat right now, but the rotational action is very lumpy. Market players still feel the pull of safety in the big-cap AI names and are not ready to go wild with smaller and more speculative names.
In addition to stronger bullish sentiment, there is both fear of missing out and short squeezes at work. The biggest negative is that there is no wall of worry. All the worries are being ignored right now. The biggest concern is trying to put more capital to work in a prudent manner.
The bulls are in control, and if small caps can continue to trend higher for a while, it is going to feel like a real bull market for a change.
Have a good evening. I'll see you tomorrow.