The market did a better job Thursday of handling two more big initial public offerings that traded substantially higher than their offering price. Airbnb (ABNB) and HydroFarm (HYFM) jumped substantially when they opened, just like DoorDash (DASH) did on Wednesday.
This time, the indexes handled the flow of billions much better with the S&P 500 and Dow holding steady, while the Russell 2000 and Nasdaq led to the upside. Breadth was good with around 4,500 gainers to 2,800 decliners, but there was a big drop in new 12-month highs to around 350, as some of the hot pockets in groups like special purpose acquisition companies and electric vehicles, but there was still a long list of stocks with moves over 10%.
There continues to be good speculative stock picking, but the flood of initial public offerings and secondary offerings sucked up billions in liquidity and that caused more chaotic trading. There weren't many major technical breakdowns, but the increased volatility caused some nervousness and triggered some sell stops at the wrong time.
Now that these huge deals are mostly over, the market has some time to digest and find new support. Even if the large IPOs did cause some rotation of funds, it is hard to classify them as negative or bearish, when there was so much big money willing to chase them higher. Perhaps that will ultimately be a contrary indicator, but in the short term, it supports the view that there is a lot of money still looking for a place to go.
Some of the bears were betting on a pullback this week. It wasn't much of one, but there was some corrective action, but support is very strong. That bodes well for more upside in the weeks ahead.
Have a good evening. I'll see you tomorrow