Market players quickly forgot the drama of the massive rotation out of growth and momentum stocks and into value plays that has caused chaos the last couple of days. Momentum stocks stabilized and buyers are rushing to put money to work in "safe" plays like Apple (AAPL) and beaten down small-cap names.
Momentum stocks didn't see big bounces, but the lack of further downside was all that was needed to restore bullish sentiment and send market players for ways to put capital to work. One of the easiest ways to put money to work is to buy a dominate name like Apple.
Although some folks questioned whether Apple had announced any new meaningful additions to its product line, it didn't matter much as the stock made a strong technical move to a new high on increased volume. It was a very attractive technical move and has to make people wonder how bad the market can be when a name with a mega-market cap like Apple can look like the momentum names that were leading before the last couple days of rotation. Apple is a heavyweight in the indexes and is all that is needed to push the S&P 500 and Dow Jones industrial average above the recent highs.
The action Wednesday is another good illustration of how confounding the market can be for those who are trying to predict what will happen next. No one saw the rotational action coming, and few saw it ending so abruptly with Apple becoming the leading momentum name.
What was also notable Wednesday was that small caps outperformed again. Small caps have lagged for months, but over the last three days, they have been beneficiaries of the rotational action. That momentum money is looking for new places to go, and much of it is rotating into under-the-radar "value" plays.
The rotational action left quite a few market players shaken and uncertainty. When the action improved many were uncertain about chasing the strength but as it persisted the fear of missing out kicked in.
This market is doing its best to make things difficult for those that are trying to navigate its twist and turns but the bulls took back control today and are in position to test the July highs. A run to new highs with the Fed interest rate decision on deck would present some interesting drama.
Have a good evening. I'll see you Thursday.