The week ended much as it started -- with a frenzy of small-cap stock-picking. For weeks now, the driving force behind this market has been aggressive buying in various sectors such as biotechnology, semiconductors, cannabis, SPACs, gambling, bitcoin, batteries, electric vehicles, and a variety of other groups and themes.
Cannabis was the hot sector this week, but it became overheated on Thursday and caused some chaotic trading after a very sizable rotation. The market was a little hung over from the after-effects of that action, but small-cap traders went to work again on Friday and then rampaged into the finish line at the close. The S&P 500 finished at a new all-time high, and over 1,000 stocks hit new 12-month highs on Friday.
The biggest negative right now is that this action has been too good for too long. That doesn't mean it won't continue, but it makes quite a few folks quite nervous. The fear of the one-day crash is holding many folks back, but typically it has been an unrealistic worry.
The good news is that this is not a narrow market and, with a few exceptions, valuations are not that bad. It is still not hard to find good, unextended charts and stocks with good earnings and positive growth stories.
The easy thing to do is to stand aside in anticipation of more difficult times ahead. The hard thing is to stay with the action as long as possible and keep trying to rack up gains. The hard thing usually pays better than the easy thing.
Have a great long weekend. I'll see you on Tuesday.