Stocks rallied for the third day in a row, but this action shifted, and it was growth stocks, small caps, and lagging sectors like biotechnology that performed best.
Breadth was solid with around 5,600 gainers to 2,500 decliners, but the Dow Jones index lagged and barely managed a positive close.
New highs exceed new lows for the first time in a while, as the worst stocks in the market finally are off their lows.
The problem at this point is that many stocks have jumped too far too fast and need a rest. There are hundreds of charts with the same pattern -- weeks of down-trending action and then two or three big positive days. While it is a relief to see so much strength, this is not a technical pattern that is easy to buy.
In addition to the obvious technical issues, many market players are mumbling about the consumer price index report and the weak action in the 20+ Year Treasury Bond exchange-traded fund (TLT) . Bonds dropped sharply, and yields jumped as Omicron fears subside and worries about inflation are renewed.
If the market rolls over again, it is very likely that the explanation for the action will be inflation and interest rate worries.
The good news is that even if some stocks do pull back from here, there is good technical support in place. The market can afford some rest, and if there is a pause, it will help the charts develop.
It was a good day for stock pickers, but it is becoming very hard to put more money to work right away. We need some rest.
Have a good evening. I'll see you tomorrow.