The senior indexes ended the day close to flat while the Nasdaq managed a gain of 0.5%, and the Russell 2000 exchange-traded fund (IWM) was the big winner with a gain of 1.4%. Breadth was OK, but not exceptional, with around three gainers for every two decliners. There were over 900 stocks hitting new 12-month highs and only 50 at new 12-month lows.
What was most notable about the action today was the number of stocks moving 10% or more. I've not seen a list this long in a while. There were quite a few biotechnology names but a variety of others as well.
A big part of the action was the announcement of the stocks that will be added to the Russell 3000. There are about 255 stocks on the list, and around 192 advanced, while only 63 declined. Of those that advanced, 25 were up more than 10% with Clover Health Investments (CLOV) -- which is leading with a gain of 32%.
There was an oversupply of good small-cap movers, but the question now is whether they can build further momentum on the Russell rebalancing catalyst. These stocks will not actually be added to the indexes until June 25, so there are nearly three weeks for the funds to market arrangements to accumulate the necessary shares.
Nonetheless, there is some very good price action, and the technical patterns are good, regardless of what the catalysts might be. The action in the big caps was mediocre at best, but it was more due to a lack of interest rather than a rotation.
While this was good action, it is important to understand that there isn't any sudden improvement in fundamentals or valuation. This is index-driven, and that is one of the most powerful forces in the market.
Have a good evening. I'll see you tomorrow.