Stocks started slowly, but the action picked up, as early lows held and the bears were unable to pick up traction on concerns about the spread of Covid-19 in Europe.
The reversal of last week's rotation continued with the Nasdaq 100/Invesco fund (QQQ) gaining 1.86%, while the Russell 2000 fund (IWM) lagged with a gain of 0.78%. The stocks that led last week lagged, and last week's laggards, which included the FATMAAN tech names, led to the upside Tuesday. Special purpose acquisition companies struggled, and small-cap biotechnology had a hard time gaining traction. Breadth was 3,900 gainers to 3,400 decliners, and there were more new 12-month lows and highs, which illustrates it was a mixed bag.
Action that shifts this quickly can be difficult for traders who were focused on hot groups that are now being replaced with some new movers. If you have been riding the momentum in some good stocks, it is very difficult to suddenly switch horses, but that is what was necessary to keep pace Tuesday.
Nike (NKE) put up some solid numbers after the close and is trading up around 8%. That should help sentiment in the bigger cap names and keep the rotation into some of the old leaders going.
The good news is that this market has little interest in embracing a negative narrative. Political, economic, and Covid worries are not gaining any traction. While the rotational action is making the trading quite challenging, the overall price action remains positive.
Have a good evening. I'll see you tomorrow.