A reversal following a gap-up open caused momentary excitement for the bears Tuesday, but it ended up being nothing more than just some minor selling and routine rotational action.
Breadth remained solid with around 3,950 gainers to 3,750 decliners, but over 1,600 stocks hit new 12-month highs. There was plenty of strong momentum again, with some of the bitcoin-related names doing best.
While the interest in small-cap stock-picking continues to be extremely strong, there was rotation out of recent winners and into other sectors. It was nothing very dramatic, but social media traders focused on last week's winners had some difficulty.
The indices are still extended and need more consolidation, but the good news is that the rotational action helps make things less overbought. The indices really don't tell us much about what is going on, as the key to this market is small-cap stock-picking, and it still looks very healthy.
There are plenty of market timers looking for pullbacks, and the gap-up and reversal Tuesday gives them some hope, but there is very strong support out there and plenty of liquidity looking for a place to go. We are likely to see more rotation and some corrective action in the near term, but I do not see anything yet to indicate that more aggressive selling is likely to develop.
Stick with the stock-picking.
Have a good evening. I'll see you Wednesday.