The market has been riding a wave of liquidity for months and traders were concerned that a large number of significant IPOs and secondary offerings would put a crimp in the momentum that has been running so hard. The DoorDash (DASH) IPO did trigger some selling but the huge Airbnb (ABNB) offering on Thursday was well digested.
Not only did the market handle these offerings well but there was huge demand and they traded well over the offering prices. This did produce some increased volatility in SPACs and other leading groups but the appetite for these stocks remained robust despite the corrective action. There was no real change in market character -- this was just an interruption in the "flow" to deal with the offerings.
There are a couple of positive catalysts as we wrap up the year. The first is seasonality. There should be some pressure to produce performance as things wind down and I expect to see traders aggressively pursue the high momentum names.
The second catalyst is likely to be optimism about a fiscal stimulus bill and the launch of a Covid vaccine. While there is continued concern about the number of Covid cases, the market is simply looking past that and anticipating an eventual return to normal.
This has been a great market for stock-pickers and I believe the likelihood is that it will continue for a while. We don't have the narrow leadership of the FATMAAN names like we did back in the summer and many of the stocks that are running are not wildly overvalued or extended. There are some excesses, but nothing that is that unusual.
I'll be working on my trading plans this weekend and I'm quite sure I will have a long list of potential buys as the action develops.
Have a great weekend. Get that holiday shopping done early. I'll see you on Monday.
