It was a messy week with major divergences between the indices, but two major themes drove the action: rotation and higher interest rates.
Markets are struggling to deal with an economy that is in a rush to open, $1.9 trillion in additional stimulus, and a steady rise in interest rates and inflationary pressures.
Money continues to rotate out of technology stocks and other names that benefited from the "stay at home" economy and moving quickly into names like Boeing (BA) , which is driving the DJIA higher, while Apple (AAPL) weighs on the Nasdaq. Groups such as hotels, traditional retailers, and airlines continue to find bids.
For many traders, the biggest challenge recently has been that momentum has slowed, and the major trading themes have been inconsistent. For example, the cannabis names looked very poor on Monday and Wednesday but were strong on Tuesday, Thursday, and Friday. SPACs have been very sloppy, and even the meme trading has been far less consistent.
The technical action of the DJIA, S&P 500, and Russell 2000 ETF (IWM) is improved over last week, but the Nasdaq Composite and Nasdaq 100 (QQQ) are lagging badly and can't seem to find good support. Rotation of this sort is healthy, but it does make stock selection much more important.
The best news this week was that there was better stock-picking. The action on Thursday was particularly good, and we have to wonder if the start of the next round of stimulus payments may cause more interest from individual traders.
We have plenty of interesting charts to consider for next week. Enjoy the weekend, and I'll see you on Monday.