Market skeptics have been theorizing that that very poor market breath would lead to a market collapse when big-cap names like Apple (AAPL) , Amazon (AMZN) , and Tesla (TSLA) eventually reversed. That may eventually prove to be the case, but it didn't happen yet.
What happened Monday was that some of the excesses from last week reversed. Breadth was improved with around 4,750 gainers to 2,625 decliners, new highs expanded to 435, small caps included in the Russell 2000 (IWM) jumped over 1%, financials found support and bounced 2.3%, and the S&P 500 closed at a new all-time high and at the highs of the day.
The market not only saw some rotation into some laggards, but it broadened and the chasing of a few big caps was not as aggressive. That is a healthy shift, but these changes are occurring on an almost daily basis and that is making it quite challenging for traders. There is a fair amount of weakness under the surface, but it keeps shifting and the indexes have enough big-cap strength to keep it hidden.
The special purpose acquisition group worked very well Monday with names like Tortoise Acquisition (SHLL) , Forum Merger (FMC) , and Graf Industrial (GRAF) did very well. Biotechnology was weak, technology strong, but the Nasdaq 100 fund (QQQ) lagged.
If you are looking for reasons to be bearish, the chaos of the action provides a good argument, however, the liquidity, steady dip-buying and new all-time highs for the S&P 500 make it very difficult to be too negative.
Have a good evening. I'll see you tomorrow.