I have been contemplating a trading strategy as we head into the end of the year. The best advice I can give is to stay focused on sectors and themes. The stocks that are going to perform best are those that are attracting the attention of aggressive traders and investors that are looking for major momentum to end the year.
We are already seeing this to a good degree. Crypto-related names have been extremely strong, cannabis stocks finally bounced nicely after months of misery, and many social media traders are intently focused on stocks that are moving due to structural issues with SPACs and de-SPACs.
There have also been flourishes of activity in high beta, growth stocks like those favored by those that follow the CANSLIM method, and the breakout in the Russell 2000 has finally given life to many small caps.
One group that has been struggling is biotechnology, but that is mainly due to the maturity of the vaccine products. The stocks that moved big on COVID like Moderna (MRNA) and Pfizer (PFE) are well off highs, and that is hurting the sector and is covering up some better action in some smaller names.
What is most interesting about this market from a trading standpoint isn't that the indexes keep hitting new highs, but that speculative trading interest is so strong. There are plenty of retail traders looking for some new ideas. The old-time meme names like AMC (AMC) and GME (GME) have lost their shine, but that money is going to be very active into the end of the year and will be looking for the next hot theme.
I'll be focused on what is moving. Tuesday, some of the best action is in SPAC-related names like Altimeter Growth Corp (AGC) , SAB Biotherapeutics (SABS) , Merida Merger Corp I (MCMJ) , IONQ Inc (IONQ) , and Ginkgo Bioworks Holdings Inc. (DNA) .
Please note that due to factors including low market capitalization and/or insufficient public float, we consider some of the stocks discussed here to be a small- or micro-cap stocks. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.