On Tuesday, the indexes did very well, but under the surface, breadth was mixed. But Wednesday, the indexes were close to flat, yet under the surface, breath was around three to two positive, and there were over 350 stocks hitting new 12-month highs.
The difference was that there were more stocks moving up Wednesday, but there were not as many strong pockets of momentum. The number of stocks up 10% was about half of what it was on Tuesday.
The indexes faded late in the day, and the S&P 500 closed at the lows, but the movement was so minor that it was inconsequential. Overall the technical action is healthy, and there is plenty of focus on stock picking. That doesn't mean it is easy, but there are plenty of traders looking for stock picks, and they aren't too concerned about the indexes. Big picture worries like inflation and interest rates seem to have been forgotten for now.
The Russell index reconstitution that takes place at the close on Friday is having an impact on some stocks, but it is very random and tough to trade. There are trillions of dollars that are impacted by this shift each year, and it is always fascinating to see the huge blocks that will cross at the closing bell on the last Friday of June.
The market action is a bit choppy and random, which keeps trading challenging, but we don't have the froth and euphoria that we had the last time the Nasdaq was at its highs, and that is good news. This is a market for stock selection, and that always offers good opportunities.
Have a good evening. I'll see you tomorrow.