The challenge of this market recently is that the indices continue to trend higher on low volume, but under the surface, there is a lack of energy. For example, Thursday morning, the indices are up nicely, but the Russell 2000 ETF (IWM) is down, and there are only about 10 stocks up more than 10%.
Breadth is OK with around three gainers for every two decliners, but the gainers are not flying higher. There are over 600 new 12-month highs, but that is not particularly robust for a market with indices hitting new highs on a daily basis.
Back in mid-February, it was individual traders that were embracing a frenzy of small-cap trading. That has disappeared, and now it is institutional buyers steadily buying big-cap names driving the action. It is disappointing action for aggressive stock-pickers right now, but that is how rotation works at times.
My game plan is to keep monitoring my watch list and look for a shift in the action. I'm holding quite a few names that I think are solid fundamentally but are suffering from poor price action. I have to cut some as they languish, but I'm ready to jump back in very quickly and very aggressively as conditions change.
A couple of large-cap names that I have on my radar for accumulation are Tencent Music (TME) and Roblox (RBLX) . TME was hurt badly in the family office blow-up back on March 24, and it has not recovered. Of all the media stocks that were hit hard at the time, such as ViacomCBS (VIAC) , it has the best growth and valuation. I expect it to eventually turn back up as it holds support.
RBLX is the blue-chip of the gaming sector and a stock that I think most institutions will want to hold for exposure to the sector. Every parent of young children is familiar with it, and that will help to keep sentiment positive.
Overall I'm not doing too much right now. The indices are extended, and individual stocks are weak. It is not a good combination.