The very strong rotational action of the last couple days has come to an end and market players are back to chasing the names that have led the market since the March lows. The easiest way to see this is to look at the Nasdaq 100 ETF (QQQ) which is the home of the FAANG stocks. The QQQ is up 1.2% today and leading all indices, while the Russell 2000 ETF (IWM) is lagging with a loss of 0.2%.
'Work at home' stocks, biotechnology, FAANG names, and SPDR Select Technology (XLK) are leading. The number of new 12-month highs is back over 100 again and breadth is running about 4300 gainers to 3050 decliners. It is the same action that was so persistent until the brief flurry of action in banks and some of the lagging names like Disney (DIS) and General Electric (GE) .
While the momentum is good, the chase is increasingly difficult. Some of the leading names did rest a bit during the rotational action but many are badly in need of some basing or resets to build support for another leg higher.
There is no way to measure this but I don't recall a time when more traders and investors have felt as poorly positioned than they do right now. Even the bulls that fully embrace the 'don't fight the Fed' mantra seem to be carrying more cash than normal and are looking for at least a minor pullback.
It isn't a high level of bearishness that is driving a contrary move but the high level of cautious bulls that are helping to fuel this steady rise. No one is looking for a retest of the March lows at this point but many market players are looking for at least a minor pullback in the face of what is sure to be some very ugly economic reports in the next couple of months.
The Wall of Worry is a mile high and there appears to be a large amount of idle cash that is fueling a steady climb. Anyone that thinks they can predict when it will end has probably already been wrong several times.