We continue to experience a two-tiered market with some bigger caps helping the major indices while small-caps continue to struggle.
The Nasdaq 100 (QQQ) is leading while the Russell 2000 ETF (IWM) is lagging. Breadth is around two gainers for every three losers but many groups such as biotechnology and SPACs continue to drip lower.
The bright spot is bitcoin (Grayscale Bitcoin Trust (GBTC) ) and some of the NFT plays like Mudrick Capital Acquisition (MUDS) (the vehicle for the Topps acquisition) but there aren't many stocks participating in that action.
The FATMAAN names are doing most of the heavy lifting today but it is disappointing to see the list of stocks moving up more than 10% at such low levels again. We have not seen any real expansion in momentum in a while and it has really caused speculative sentiment to decline.
At this point I don't see much to do. Some of the small-caps I favor are washed out and close to finding support but there are no signs of a strong "snapback" at this point. The bounces are being sold and support levels are weak at best. I don't think there is a lot more downside but it may take time to see any decent upside. I'd rather be late jumping in on a bottom fish than jump in too early.
I see many traders becoming emotional about the current market, which isn't a bad thing. They are disgusted with the poor action that has lasted almost two months now. There are some signs of capitulation but the problem is that the major indices simply don't reflect what is going on and that keeps sentiment more bullish than it should be.
Be careful about bottom fishing too aggressively. Even if you do catch a low there isn't much energy to take things higher.