Although there is some decent bounce action, it is very inconsistent and frustrating traders once again. While 29 of 30 of the stocks on the Dow Jones industrial average are in positive territory, the ARK Innovation exchange-traded fund (ARKK) is trading down more than 3%, and the Russell 2000 ETF (IWM) is at the lows of the day.
Breadth is good at around 5,100 gainers to 2,700 decliners, but there are only about 50 stocks on the new high list and 140 making new lows. The growth and speculative small caps are struggling to hold support levels and are doing so with mixed success. I have to wonder if the ARK funds are driving the weakness in growth names, whether than the other way around. It is such a stark contrast to the rest of the market that it looks like it is driven by attempts at manipulation more than anything else.
Upstart Holdings (UPST) is a great illustration of how disconnected some stock action is from fundamentals. The stock beat earnings per share estimates, raised revenue guidance substantially, and had several price target increases, but the good news has been aggressively sold, and it is on the verge of breaking below the lows it hit on Tuesday morning.
UPST just happens to be a holding of ARK, which raises the question if it is being sold so hard solely due to that connection, or did the market just decide that growth stocks with high price-to-earnings are just too expensive?
There are many other stocks that are acting the same way, and the fact that the Dow is totally disconnected from that sort of action makes it more difficult to understand.
This action is making many traders grumpy and unhappy. If that is a contrary indicator, then we are in good shape.
I'm not doing too much, but I have added to a position in Enthusiast Gaming Holdings (EGLX) , which I recently discussed here. This is one that I think will be a major winner in the gaming sector in the fullness of time, and I'm taking advantage of some "sell the news" action today.