Wednesday was another day where the S&P 500 and Nasdaq 100 hit new all-time highs, but breadth was negative with 3,400 gainers to 4,550 decliners.
While there were notable pockets of weakness in growth stocks, biotechnology, oil, and small-caps, strength in a smaller group of big-cap names more than offset the weakness and gave the indices a push higher.
Back in February, there was similar action, and many speculative, growth and small-cap stocks fell into a bear market that lasted for several months. Most of these stocks started to bounce in early May, although they never were even close to recovering all the losses they accumulated from the top of February.
The big difference this time is that the stocks that are correcting are not widely extended like they were in February. Many still have some aggressive valuations, but the market is quite different than it was four months ago.
The biggest problem this action creates is that it undermines positive sentiment. The focus is on simply being in the big liquid names that are running, and all other issues are secondary. Don't bother trying to pick stocks. Just buy an Amazon (AMZN) or Apple (AAPL) and stay with it as long as possible.
There was quite a bit of pain today in some of the growth stock favorites such as Palantir (PLTR) and DraftKings (DKNG) , but you wouldn't know it from the action in the indices. At some point, this inconsistency will shift, but there is no way to know when or how.
Have a good evening. I'll see you Thursday.