The recent rotational action is picking up steam again and is some of the most dramatic that I have ever experienced. While the DJIA pushes higher into new high territory mostly due to commodity-related names like Caterpillar (CAT) and Dow Inc (DOW) , the growth and speculative names are being slammed again. All the FATMAAN names are down on the day, and it is hell for small-cap speculative names that can't find support.
There was some bounce action on Friday that gave traders some hope, but it was quickly crushed this morning. ARK Innovation (ARKK) is down over 3% and hitting a new low for the year. This continues to be the best illustration of how growth names are acting compared to the broad market.
Many traders are speculating that the ARK funds are being targeted by large hedge funds, and that is a big part of the action in those names.
Another good illustration of the rotational action is that breadth on the DJIA is 1700 to 1350 positive, while on the Nasdaq, it is almost exactly 2 to 1 negative. It is definitely a tale of two markets.
Relative strength traders are focused on oil, commodities, and value names, but they are already quite extended in many cases. The folks that were critical of traders for chasing extended growth names are now in the same position themselves when it comes to value names.
This is one very tough market for most traders right now, and the only remedy for it is patience.