The senior indices finished the week with minor losses, but the Russell 2000 ( (IWM) ETF) squeezed out a minor gain, which reflected some bottoming action in the stocks that have been suffering the most.
On Wednesday morning, the pressure on speculative small-caps in groups such as biotechnology, gambling, SPACs, solar energy, electric vehicles, and growth started to lift. The buying picked up nicely and continued into Thursday when news hit that a Biden proposal would potentially sharply raise capital gains taxes. Stocks sold off on the news but regrouped nicely on Friday and trended higher most of the day.
At the close on Friday, breadth was 6,200 gainers to 1,600 decliners. New 12-month highs rose to 736, and there were only 28 new 12-month lows. Most importantly, the pockets of momentum finally picked up, and that means that stock-picking was working once again.
It looks like we made a good low on Wednesday, and many stocks are setting up nicely for further upside next week. Although the indices were flat, that is exactly what we need for better technical conditions after the dips during the week.
Next week there is a slew of earnings reports with all of the FATMAAN names reporting except for Netflix (NFLX) . The reaction to these reports will help to set the tone for the market as we move ahead. The good news is that most of them have pretty good-looking charts.
It was a choppy week with sizable moves each day, but the end result was positive. It is now up to the buyers to build on this foundation.
Have a great weekend. I'll see you on Monday.