The S&P 500, DJIA and Nasdaq 100 all finished the week at new all-time highs, but the market action is nowhere close to the frenzied trading that we were experiencing for two months. Breadth was negative again, volume for the SPDR S&P 500 ETF (SPY) has been declining, and some of the groups that led recently, such as biotechnology, are back to levels last seen in October.
It is a strange mix with superficial new highs and plenty of lackluster action under the surface. Some of it is just rotational, but the biggest disconnect is that small individual trades that were in a frenzy not that long ago have almost totally disappeared as the senior indices jump to new highs.
Ever since the market hit a low in the 2008-2009 recession, there has been a strong tendency toward rotational corrections. Rather than a market where everything sells off in tandem, there has been a much greater tendency for various parts of the market to correct at different times. The ugly action never really is seen as a smaller group of big-cap names tends to hide it.
The trillion-dollar question is whether this rotational correction is going to end as we head into earnings season in the next couple of weeks. There is better action in some groups like SPACs, but we don't have the hot sector momentum that was so fun to trade early in the year.
The good news is that you can't call this market overbought when so much of it isn't participating. There are some good values out there, and sooner or later, they are likely to be recognized.
Have a great weekend. I'll see you on Monday.