After a failed gap-up open on Tuesday and a poor open on Wednesday, it looked like the bears may finally have an opportunity to pressure the market a little on Wednesday. The small-caps that have done so well lately were experiencing a bout of profit-taking, and the pockets of momentum had dried up.
The selling pressure lasted until about noon ET, and then it was straight up the rest of the day. When the closing bell rang, the S&P 500 ETF (SPY) had managed a very small gain. Breadth was poor with around 2,875 gainers to 4,750 decliners, and the number of new 12-month highs fell by more than 1,000 to 435, but it was not the rout that many had anticipated following the soft open.
What continues to be most notable about this market is how speculative buyers refuse to give up. Many of them gravitated to bitcoin-related plays Wednesday as bitcoin hit new all-time highs. There is still quite a bit of liquidity out there looking for someplace to go, and bitcoin plays benefited from that.
There were also some good bounces Wednesday in gambling, oil, and various SPAC plays. In the SPAC sector, there was interest in Butterfly Network (BFLY) and Foley Trasimene Acquisition Corp. II (BFT) , for example.
I've been very repetitive on this point, but it is the key to navigating this market: it is all about stock-picking. The indices just aren't telling the story. If the indices were a stock, I wouldn't buy them, but there are many individual stocks that look quite appealing. There are some crazy valuations out there, but there are also some very good ones.
Some people call this market a bubble, but I see plenty of stocks that look quite reasonable, and I plan to continue to trade them.
Have a good evening. I'll see you Thursday.