Fed Chair Jerome Powell caused a sharp intraday dip on Friday when he commented that inflation might not be as transitory as he had previously indicated. That isn't a big surprise, but it was a good excuse for some selling. Stocks rebounded quite well, but the S&P 500 finished with a small loss that broke its winning streak at seven days.
Breadth was negative with around 3,650 gainers to 4,400 decliners, which was reflected in underperformance by the Russell 2000 exchange-traded fund (IWM) . There was some wild speculative trading again, primarily in the special purpose acquisition group, but many small caps continue to struggle with a lack of bids. They did not see heavy selling, but there is a distinct lack of bids in many names.
This has not been an easy market to trade as there has been rotation and choppy action. The indexes have been steady, but individual stocks have been volatile, and there are plenty of landmines like SNAP (SNAP) . There were at least eight blowups in the biotechnology sector this week.
The indexes moved straight up all week, which left things a bit overbought, but the good news is that there is now a clear uptrend, and momentum has been building. This action is creating some very good charts, and with the anticipation of solid earnings reports building, there should be some positive price action.
I continue to be optimistic about trading into the end of the year, but this is not a buy-and-hold environment. It is necessary to work the trades and to be very aware of news flow. I'll be discussing some new buys next week.
Have a great weekend. I'll see you on Monday.