After a very slow start this morning, sentiment improved and drove the indexes into positive territory, but it was another deceptive day in which the indexes performed better than the majority of stocks. Breadth was 4,600 gainers to 3,300 decliners, and there were 140 new 12-month lows, despite the senior indexes hovering at highs.
One of the ironies of this market is that some folks look at action like Robinhood (HOOD) and the indexes at highs and think that the action is frothy and a correction is due. Other folks look at the continued poor action in many small caps, growth names, and speculative stocks and think that they are so badly beaten up that a bounce must be close.
The two-tiered nature of the action is frustrating many traders who can't figure out why their fundamentally strong stocks keep sinking.
For some reason, this market favors indexes and big caps over everything else. There is no compelling argument for it other than the fact that traders tend to stick with what is working until it stops working.
We have plenty of earnings reports hitting this week to cause some movement, but one of the big problems this earnings season has been negative reactions to some good numbers. Perhaps expectations were too high, or maybe traders are engaging in knee-jerk sell-the-news but chasing good reports has not worked.
Despite the positive index action, this is a very tough trading market. Don't be fooled by the folks in the media.
Have a good evening. I'll see you tomorrow.