Anyone who glances at the Dow Jones industrial average Monday will not have a clue about what is really going on in this market. The Dow hit a new all-time high and finished with a gain of 0.95%. That sounds like a roaring bull market, but the current action is far from it.
If we dig a little deeper, breadth was positive with around 4,100 gainers to 3,700 decliners, but it was a totally different story in the Nasdaq 100 fund (QQQ) , which is the home of the FATMAAN names and many other big-cap technology stocks. About two-thirds of the QQQ names were down on the day, with some leaders like Tesla (TSLA) , Zoom (ZM) , and Baidu (BIDU) taking big hits.
The best-performing stock in the QQQ Monday was Ross Stores (ROST) which is a good illustration of how the tremendous rotation out of technology and into "reopening" plays is driving the action.
It isn't just the rotational action that is an issue. The 20-plus Year Treasury Bond fund (TLT) closed at its lowest point since January 2000. Interest rates are heading higher, and the market is still struggling to deal with that issue.
One of the primary problems caused by the weakness in leading technology names is that it hurts sentiment in faster-moving, speculative stocks. When stocks like Apple (AAPL) and Amazon (AMZN) are hitting multi-month lows, it hurts the confidence of smaller speculative buyers. The number of stocks making moves of 10% or more has been shrinking lately, and that is one of the main reasons why.
The good news is that this selling isn't panicky. It is dreary and slow. As I've written many times -- bad markets don't scare you out -- they wear you out. This market is definitely wearing on some folks lately, but the corrective process is still at an early stage and needs more time to find support.
Have a good evening. I'll see you tomorrow.