The most notable characteristic of this market is the rotational action that is taking place, but a close second is the abruptness of the reversals. After looking downright miserable Monday, the Nasdaq 100 ETF (QQQ) has completely reversed yesterday's losses and is trading up 3.4%.
Breadth was around even Monday, but Tuesday it's running around 5,700 gainers to 1,875 decliners, and the list of stocks moving more than 10% is very long.
The challenge for traders is that if you have been managing positions tightly and taking stops on weakness, then you probably have high levels of cash and are hesitant about chasing strength. There have been several situations recently where the extremely strong breadth and one-way action turned out to be a bull trap rather than the beginning of sustained momentum.
I'm trying to get a little more cash to work. I have exposure to bitcoin through Grayscale Bitcoin Trust (GBTC) and Canaan, Inc. (CAN) and will be looking for entry points, but the momentum is too strong to chase right now.
I think the cannabis sector may have found support, and there is good action in that group as a number of the multi-state operators are issuing earnings soon. Some of the pot names on my radar are Green Thumb Industries (GTBIF) , Cresco Labs (CRLBF) , Trulieve Cannabis (TCNNF) , GrowGeneration (GRWG) , Agrify Corp. (AGFY) , and AdvisorShares Pure U.S. Cannabis ETF (MSOS) . There are a number of them that are very good values compared to other areas of the market.
I'm also dinking around with a number of individual trades. Golden Nugget Online Gaming (GNOG) , which I highlighted here Monday, is moving nicely and other gaming plays such as Elys Game Technology (ELYS) , DraftKings (DKNG) , Bragg Gaming Group (BRGGF) , Enthusiast Gaming Holdings (ENGMF) are on my radar.
The important issue now is that the indices hold above recent lows and then produce a "follow-through day" in the next week or so.
The key here is bonds ( (TLT) ). If interest rates have topped out for now, then equities should regain some good momentum.