Sharp reversals in a number of bigger-cap momentum names and the marijuana sector is putting pressure on the indices Wednesday. While the losses in the indices are still mild, there are some big shifts in the stocks that have recently been the hottest.
The best example of the cooling speculation is the "pot" group and individual stocks such as Tilray, Inc. (TLRY) and Cronos Group Inc. (CRON) . The bears have been whining about valuations in the sector a long time, but so far they have been crushed by momentum players. Momentum is now cooling off and starting to work in reverse.
There are also some sharp reversals in breakout plays. Etsy, Inc. (ETSY) , for example, broke out of a nice pattern Tuesday, totally reversed and is now down sharply Wednesday. Even the mighty Apple (AAPL) is exhibiting some signs of profit-taking.
Breadth isn't terrible, with around 2,500 gainers to 4,250 decliners but the number of new 12-month highs is less than half of what it was Tuesday. The S&P 500 is still holding above Tuesday's lows but the key will be whether the streak of strength that exists in the last hour comes to an end.
As I noted Tuesday, while I am a heavy net seller, I am still looking for some favorable action in individual stocks. One name on my radar today is NIO Inc. (NIO) , a Chinese manufacturer of electric vehicles. It is breaking through key resistance at $8 and volume is picking up nicely.
Stay focused on keeping your portfolio as close to highs as possible. That is far more important than trying to guess what the market will do next.