It was a mixed week for the indexes with the S&P 500 and Dow leading and Nasdaq 100 (QQQ) and Russell 2000 (IWM) lagging. The overall action was positive, but there was some intense rotation out of big-cap technology and into "value" stocks that reversed at the end of the week.
It was choppy and sloppy, but the positive spin is that it is a consolidation process and there was no major technical damage done. The negative spin is that there was a change in character and some instability in the action that indicates some concern about the market's ability to continue to trend higher.
If you are an anticipatory bear, you likely could find some good reason to stay bearish. If you are a reactive bull like me, then there wasn't enough negative price action to cause any major shift in positioning.
The biggest positive continues to be the stock picking. While the crazy, speculative day trading action in low-priced stocks cooled off a bit, there was still some strong stock picking. I had good success with some cannabis and biotechnology picks and saw quite a bit of healthy trading that did not reflect any great market nervousness
There continues to be some very compelling and logical bear arguments, but the price action simply will not give in to the negative narrative. We either have to sit on the sidelines and wait for the disaster that some are expecting, or we can continue to trade strong price action when we find it. I probably don't need to tell you which approach I've taken.
We should continue to see some good stock picking, but stay watchful for broad, correlated selling. If and when that hits we will need to take defensive action quickly.
Have a great weekend. I'll see you on Monday.