The indices are mixed with small-caps and growth names lagging on negative breadth of about 2850 gainers to 4700 decliners. What is most notable is that new 12-month highs have dropped very sharply to just about 80 names as recent leaders are being sold.
This is consolidation action in the form of rotation. It is necessary and healthy, and it is easy to read too much into it. It may last a few days, but it will help charts develop and provide a better setup as we head into the seasonal strength in November and December.
The big earnings news from Microsoft (MSFT) and Alphabet (GOOGL) are helping to offset quite a bit of weakness elsewhere and does show that there is still some big capital looking for a place to go.
I'm still holding around 50% cash and am slowly putting more to work. I am making incremental buys of some of the names I favor, which include Aurinia Pharmaceuticals (AUPH) , Ondas Holdings (ONDS) , Redwire (RDW) , Elys Game Technology (ELYS) and Urban-Gro (UGRO) . All these names have what I believe are exceptional fundamentals that will eventually be recognized, but it may take some time.
I view this market action as quite positive. We need a rest at this point, and it helps conditions to develop for an eventual breakout of the Russell 2000.
Please note that due to factors including low market capitalization and/or insufficient public float, we consider several of these names to be small-cap stocks. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.
