News of another Covid-19 vaccine hit on Monday morning and that triggered more rotation out of "growth" names and into "value." The most obvious illustration of that action is the relative weakness in the Nasdaq 100 and FATMAAN stocks and the relative strength in financials -- as seen in the Financial Select Sector SPDR fund (XLF) -- and the industrials -- as seen in the Industrial Select Sector SPDR fund (XLI) .
That rotational action would typically be the highlight of the day, but there is much more dramatic action taking place in a variety of small-cap stocks. The Russell 2000 fund (IWM) was up close to 2% and at a new all-time high. The evidence of the strength was also reflected in positive breadth of around 5,500 gainers to 2,000 decliners and over 600 stocks making new 12-month highs. The Nasdaq and S&P 500 look nearly comatose compared to the action that is taking place in the smaller stocks.
There are quite a few themes at work in the smaller stocks. Some of it is a continuation of speculative interest in electric vehicles, cannabis, and special purpose acquisition companies, but it's mainly just smaller cap stocks with good charts and good stories. Traders are chasing positive price action and are not at all concerned about valuation right now.
It doesn't hurt that we have positive seasonality during Thanksgiving week, and we have yet to hit the peak days, which are typically Wednesday and the half day on Friday.
There is some very crazy pockets of momentum out there, and there is no way to know how long they may last. Typically, they will last longer and go further than most people think is reasonable.
Have a good evening. I'll see you tomorrow