After the ugly selling on Monday, we had a very interesting brew of action on Tuesday. The indexes bounced, but were unable to gain any real traction and closed mostly flat. This looked rather unimpressive, but under the surface, breadth was five gainers for every three decliners, and even more interesting were the "hot pockets" of speculative action.
I had a full screen of stocks moving up more than 10% during the day. Quite a few old-time SPAC names like Quantumscape Corp (QS) and Lucid Group Inc. (LCID) popped up. The "de-SPAC" squeeze continued in names like Helbiz Inc. (HLBZ) and Ensysce Biosciences (ENSC) , and there were just a lot of random secondary stocks attracting attention from aggressive traders.
Pot names came to life late in the day on news that SAFE banking had passed a committee vote in the House and would receive a full vote. I added AdvisorShares Pure US Cannabis exchange-traded fund (MSOS) on the news and a couple of other cannabis plays, including one of my favorites, which is Urban-gro (UGRO) .
If you look only at the indexes, the action looked quite poor. It was a very tepid and unimpressive bounce after the big drop on Tuesday, but the speculative action under the surface provides a very different picture. There is a lot of money out there looking for action, and it is taking a high level of risk. That isn't typical behavior in a correction or a bear market.
We will see what happens tomorrow when Fed Chief Jerome Powell and Co. provide their policy decision, but based on the speculative activities today, there are a lot of folks that want an excuse to buy.
Have a good evening. I'll see you tomorrow.