Although the indices started the day with overbought readings, that isn't slowing down the trading action. Breadth is running about 5 to 3 positive, and there are around 650 stocks hitting new 12-month highs.
Typically what happens after a run like that, which we have enjoyed over the past couple of weeks, is that traders start digging deeper to find stocks that have not moved as much as some of the leaders. The rally broadens out, and this tends to benefit smaller stocks and secondary names that are not as well known.
I was a bit frustrated last week as some of my favorite fundamental picks were being ignored. Stocks like urban-gro (UGRO) , Elys Game Technology (ELYS) , Beyond Air (XAIR) , AMMO (POWW) , Performant Financial (PFMT) , Aehr Test Systems (AEHR) , Beauty Health Co (SKIN) , Acacia Research (ACTG) , and Quantum-Si (QSI) have been lagging, although most are quite cheap in comparison to many growth names.
These sorts of stocks tend to be quite faddish at times, and the only thing to do is to wait for the right environment to develop. They will eventually be discovered, but it can be quite miserable when the market simply doesn't care.
We will see how things develop over the next couple of weeks as earnings hit, but the action today was another change in character. The stock picking is spreading to some of the small-cap values, and I'll be looking to ramp position as the price action improves.
I mentioned in my prior post that Redwire (RDW) was my stock of the week. Shortly after, news hit that they are part of a deal with Jeff Bezos' Blue Origin to develop a private space stated 'business park'. The stock moved sharply highly and has pulled back. I took some profits but feel that there is a good chance for further upside based on the very attractive valuation.