Traders have been grumbling about lousy price action in speculative small caps for weeks, but the sour mood suddenly lifted, and stocks enjoyed some very robust action. Breadth was 6,500 gainers to just 1,300 decliners and 12-month highs jumped back to over 400. However, what was most significant were the pockets of momentum. For the time in weeks, my scans had dozens of stocks up more than 10% on the day.
What else helped the mood was that it was the recent laggards that enjoyed the most strength. Biotechnology, gambling, special purpose acquisition companies, growth stocks, and all the names that have been in downtrends found buyers. The ARK exchange-traded fund stocks did particularly well, which was reflected in the ARK Innovation ETF (ARKK) .
It was quite a relief to finally see the pressure lift and the mood shift, but the trillion-dollar question is whether it will be smooth sailing to the upside from here. It would be pretty naïve to believe that it is going to be easy, but the good news is that we now have support levels at the early lows, and that will help with navigation as we move forward.
Not everything participated in the upside. Bitcoin was weak, Netflix (NFLX) was unable to shake off its poor report, and the FATMAAN names lagged a bit.
We have a slew of earnings to digest, and, so far, they seem to be coming in pretty nicely after the close.
Traders are feeling much better after some of the best small-cap action in weeks, but this is just the first step in the journey to better stock-picking action.
Have a good evening. I'll see you tomorrow.