Traders have been enjoying some upbeat holiday trading in front of the three-day Memorial Day holiday. This sort of trading is marked by better speculative interest in small-caps and is readily apparent in the meme stocks such as AMC Entertainment (AMC) , GameStop (GME) and Koss Corp. (KOSS) .
Many of the growth names and speculative small-caps that topped out in mid-February have enjoyed much better action this past week as conviction has grown that a bottom has been formed. The vicious rotation out of growth and into value has ended. This is due in part to less concern about inflationary pressures as the economy returns to normal.
Cryptocurrencies have bounced back from some intense selling pressure last weekend but are under pressure again here on Friday morning as the governor of the Bank of Japan, Haruhiko Kuroda, joined other central bankers with negative comments about Bitcoin. "Most of the trading is speculative, and volatility is extraordinarily high...It's barely used as a means of settlement," he said in an interview Thursday.
These remarks are hitting cryptos as well as related stocks such as Riot Blockchain (RIOT) , Coinbase COIN, Marathon Digital (MARA) , and a few others. Active traders will be looking for some opportunities into the volatility again.
It has been a good week for stock pickers and individual traders. The question now is whether they will continue to push in front of the long weekend or whether there will be an inclination to take some profits and wait until next week before going back to work.
The trading is thin, and there is a higher risk of volatility, but as the meme names show, there is an appetite for speculative trading. Confidence has been rebuilding, but the test will be the degree to which traders engaged in dip buying on the next pullback.
We have an upbeat start to the day, but the pattern lately has been strong starts and weaker finishes. Traders will be leaving early today.
