The indices are trading well for the second day in a row on better than 2 to 1 positive breadth and an expansion in new 12-month highs to around 200. The pockets of strong momentum are a little slower, but there are more positive moves and not as many really large ones.
Under the surface, there is some aggressive rotation as nearly every one of the heavily promoted short-squeeze plays has reversed to the downside. There are substantial drops in names including GameStop (GME) , AMC Entertainment (AMC) , Koss Corp. (KOSS) , Bed, Bath & Beyond (BBBY) .
The good news is the money rotating out of the short-squeeze plays is looking for a new home. Stock-picking is heating up in sectors like cannabis, SPACs, small biotechs, and a variety of other areas. It is the lower-priced names with good charts and a positive story that are doing well.
My favorite group at the moment is cannabis, which is benefiting from chatter that the Senate may start to work on a legalization bill. Stocks in the sector have been bouncing well. I added to Village Farms (VFF) , which operates large greenhouses, and am trading other names in the group including Cresco Labs (CRLBF) , Trulieve Cannabis (TCNNF) , GrowGeneration (GRWG) , Hydrofarm Holdings (HYFM) and AdvisorShares Pure US Cannabis ETF (MSOS) .
In SPACs, I'm targeting FTAC Olympus Acquisition (FTOC) and am digging into several others as they develop.
It is all about themes again, and thankfully the short-squeeze theme has lost its luster and is no longer a major distraction.