Trading action is slow Friday as market players look ahead to the weekend after some stressful action. It has been very chaotic recently, but the action is much slower and calmer today as we prepare for the end of the quarter and what lies ahead.
The overall tone of the action is quite good, with breadth running around 5,700 gainers to 2,000 decliners, but momentum is sedate. While there are around 175 new 12-month highs, pockets of momentum are limited. There isn't any major rotation taking place, although bonds are weaker. The big move out of Nasdaq 100 (QQQ) and FATMAAN names appears to have slowed.
The biggest challenge now is that speculative stock-picking collapsed as small-caps sold off in tandem due to rotation and rebalancing. That has now simmered, and we are starting to see the stock-picking pick up again, but it is tentative, and we'll see how much appetite there is for buying in front of the weekend.
It is impossible to know if the recent corrective action has run its course, but there are many stocks that have been pummelled already and are groping to find support. They may not have immediate upside, but there probably isn't much additional downside in the near term.
One group that offers some interesting opportunities right now is SPACs. The group has been declared dead by some pundits due to the huge supply of IPOs that have been filed in the last few months. While many of these deals are never even going to be priced, there still are some opportunities with very limited risk as the stocks are trading close to redemption levels. Two SPACs that are on my radar right now that I will discuss more in the future are Roth CH Acquisition II (ROCC) , which is a possible play on NFTs, and Good Works Acquisition Corp. (GWAC) , which is a play on bitcoin.
SPACs that are "space" related are also of interest in front of the upcoming ARK Space ETF that could start trading as early as next week. An example of a couple of names there are New Providence Acquisition (NPA) and Osprey Technology Acquisition Corp. (SFTW) .
The trading action is slowing further as we hit midday, and it is starting to look like the appetite for additional accumulation is slowing. This has been one of the most challenging trading weeks of the year, so it isn't too surprising if many folks plan to exit early.
