Before the market open on Monday morning, market players were bracing for an ugly day. The indices were indicated lower by about 2% as news of a mutation in the Covid-19 virus caused concern in Europe and prompted additional economic shutdowns. Also, the Senate finally agreed on a fiscal stimulus deal after months of haggling and there were worries that would trigger a "sell the news" reaction since it had been anticipated for so long.
The indices did open sharply lower and after a brief bounce try they sold off even more. However, the low of the day was hit about 45 minutes into the trading session and it was steady buying the rest of the day.
What was most notable about the action once again was that it was primarily driven by stock-picking rather than the indices. It was individual stocks that drove the indices back up and not vice versa. Market players were beating the bushes looking for places to put cash. Only about 360 stocks were making new 12-month highs and breadth was about 2 to 1 negative but the list of stocks up more than 10% was several pages long.
Traders were active in SPACs, solar energy, electric vehicles, biotechnology, bitcoin-related names, and a wide variety of other sectors. The old big-cap leadership names and FATMAAN stocks languished as new leadership is pushing this market higher. I heard quite a few traders say that today was one of the best trading days they have ever had since they were primarily focused on picking small-cap stocks.
Part of what is driving this action is positive seasonality and that is always impacted by performance anxiety and fear of missing out. Everyone wants to close out the year on a positive note so they are pushing hard while this good action continues. It won't last forever but we need to capitalize while we can.
Have a good evening. I'll see you Tuesday.