All of the major indexes finished in negative territory, and breadth was weak with 3,000 gainers to 4,500 decliners, but there was some rotation action that prevented more severe damage.
The biggest losers were the Nasdaq 100 (QQQ) , which dropped 1.5%, and the FATMAAN names, which were all red. The winner was small caps, with the Russell 2000 fund (IWM) down just 0.1%. The list of 10% movers increased as the day progressed, and there was continued interest in groups like electric vehicles, special purpose acquisition companies, cannabis, and other odds and ends.
Bitcoin took a hard hit, with Grayscale Bitcoin Trust (GBTC) down over 15%. That cooled off some of the frothy momentum that has been driving the market, but it didn't discourage small traders that keep looking for strong positive action.
The headlines will likely blame the selling Monday on the political chaos in Washington and the controversy over social media censorship, but the main reason the market struggled is that it needs a rest. We have enjoyed a very big move in recent weeks, and stocks need to consolidate gains.
There is a temptation to read more into this action than is justified, simply because there is a shift in the price action, but it is not enough of a change to really be meaningful.
This market can easily handle a couple more days of this sort of action without any major technical damage. That doesn't mean we shouldn't be playing some stronger defense, but there is no reason to be a growling grizzly at this point.
Have a good evening. I'll see you tomorrow.
