Monday was one of those days when the indexes did a poor job of indicating what the broader market was doing. Big caps like Apple (AAPL) , Tesla (TSLA) , Microsoft (MSFT) , and Walmart (WMT) did very well, which drove the indexes higher, but under the surface, breadth was around 3,600 to 4,650 negative, and there were twice as many stocks hitting new 12-month lows than there were at 12-month highs.
Much of the weakness came in recent hot sectors such as oil, precious metals, fertilizers, and commodities, but small caps lagged, too, and pockets of strong momentum narrowed quite a bit. But one interesting development was very strong action in meme names such as AMC (AMC) , GameStop (GME) , Koss Corp. (KOSS) , and Bed Bath and Beyond (BBBY) . Also, bitcoin-related names did very well.
It was a tough day for anyone who tried to hedge long exposure with index plays. While the indexes only become more extended, many individual stocks acted poorly.
It is a messy market as there is near-unanimous agreement that technical conditions are extended, but there is strong rotational action and choppy trading that is complicating matters. The folks who focus just on indexes will have a very different view of what is going on compared to those who are looking under the surface.
The one thing that is very clear about this market is that there still is very little embrace of the negative narrative. Inflation, war, Covid in China, and a host of other negatives continue to be ignored.
Have a good evening. I'll see you tomorrow.
(APPL, MSFT and WMT are holdings in the Action Alerts PLUS member club. Want to be alerted before AAP buys or sells these? Learn more now.)
