I've been writing for a while now about how the market has not been correlated. There have been major differences in the way various sectors of the market have been acting -- and that is where the major opportunities have been. Market timing has been a suboptimal strategy for that reason.
In an interview with MarketWatch, billionaire Leon Cooperman observed much the same thing. Cooperman has broken down the action into three distinct market areas:
First is the big-cap technology names, which is primarily comprised of the FATMAAN stocks and some of the CANSLIM favorites. These stocks are very expensive and are still technically extended even after a correction.
Second is the Robinhood stocks. These are mostly speculative junk such as Eastman Kodak (KODK) or some of the small-cap Covid plays. They often make huge moves but then die in a matter of a day or two. This area of trading peaked a few weeks ago and has not been as active recently. Ever since Robinhood stopped offering data about trading volume, this action has dried up.
Third, is everything else -- and this is where the action is now. I've been quite vocal about the positive stock-picking that is mostly a function of good charts, good stories, and good fundamentals. Most of these stocks look very healthy and I think they can continue to act well into third-quarter earnings.
The big danger in this market is that the FATMAAN stocks are still the dominant force in the major indices. When they are weak they can send a false message about overall market health. To do well in this market you have to be in this third market where the values and charts happen to be.
The S&P 500 has now moved through resistance at the 50-day simple moving average as the V-shaped bounce continues.
I've been aggressively trading and am still looking to put more cash to work. One of my favorites, Big Five Sporting Goods (BGFV) , which I discuss here, is moving out nicely and I'm looking to build my position further as it develops.