The theme of the week was inconsistency. Things started off this week with the major indices hitting new highs on negative breadth. There was narrow strength and many smaller stocks struggling.
On Thursday, however, the action shifted to correlated selling. There was a substantial gap lower on nearly 10-to-1 negative breadth, but stocks worked their way higher and cut losses substantially by the close.
That was the setup for the grand finale of correlated buying on Friday. There a gap-up open, and stocks trended higher most of the day. Breadth was very strong at nearly 4-to-1 positive. Some FATMAAN names lagged a bit, but the "reopening" stocks drove the action, and small-caps did particularly well.
It was a rough week for the meme names, and cryptocurrencies also had a rough time. Bonds and oil jumped around sharply, as did a number of other sectors.
The narrative to explain the action also changed quite a bit. We have gone from fear of inflation and higher rates to fear of slower economic growth and lower rates. Some pundits called the volatility technical, and there was also some talk about how COVID variants might be having an impact that was causing bonds to sell off.
There was a lot of movement, and both bears and bulls were proven wrong at times. Next week we will move to a focus on earnings as big banks start to report, but we still have a couple of weeks before the most important numbers start to roll in.
The good news is that the action this week did help to create some better charts, but the hard part is finding sustained momentum.
Have a great weekend. I'll see you on Monday.