There is an old saying that good markets tend to open weak and close strong. Tuesday was a good illustration of that aphorism, as stocks recovered very nicely from some early weakness and the S&P 500 ended the day at an all-time high.
Breadth improved during the day with 4,800 gainers to 2,700 decliners, but what was most impressive was 850 new 12-month highs.
Traders have been a bit nervous that the frantic trading in the special purpose acquisition group was indicating some sort of top, but after a very brief pullback during the day, the group ripped higher into the close with names like Trine Acquisition (TRNE) and RMG Acquisition (RMG) making sizable moves in the closing minutes.
Many market players are tempted to try to call a top in this market, especially since there is a slew of big initial public offerings and secondaries in the next few days. Also, the negotiations for a fiscal stimulus bill are struggling, and Covid cases continue to soar in the US. There is an easy bearish narrative and with many stocks running hot, it may seem smart to go with some contrarian thinking.
The good news is that these pockets of strong stock picking are not going away. The pullbacks are being bought and there appears to be plenty of liquidity to provide support.
Another old saying is "the trend is your friend," and this trend is still treating traders very well. The market timers are likely frustrated, but this a market for stock pickers.
Have a good evening. I'll see you tomorrow.