It was a big week of earnings reports from the FATMAAN stocks and big caps, but the only index that finished in positive territory for the week was the Russell 2000 and its related small-cap exchange-traded fund (IWM) . It was a gain of around 0.9%, but it outperformed the Nasdaq 100 (QQQ) , which lost about 0.9%.
While earnings were mostly quite strong, with the notable exception of Amazon (AMZN) , there was an inclination toward selling the positive news, which makes sense given the extended technical conditions of many big-cap names.
In addition to the reaction to earnings, the market was also dealing with the wide gulf in performance between the indexes and the great majority of smaller stocks, which have been struggling for a while. That issue was not at all resolved, but there was some choppy relative strength in the small-cap area.
The poor showing of the Robinhood (HOOD) IPO didn't do much to help the mood, and there seems to be increasing worry that with big-cap earnings out of the way and the COVID variant gaining traction that the stage is set for deeper corrective action in the indexes. That may occur, but if it does, the issue I'll be watching is relative strength in the many stocks that have already suffered corrections.
Have a great weekend. I'll see you on Monday.
(AMZN is a holding in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells these stocks? Learn more now.)
