The DJIA is slightly negative, and the S&P 500 is lackluster, but under the surface of the indexes there is some good action. Breadth is close to two to one positive but what is most interesting is good relative strength in biotechnology (IBB) , growth (ARKK) , cannabis (MSOS) , small-caps (IWM) , and other sectors that have been the biggest laggards for a long time.
I've been discussing the disconnect of some secondary stocks from the indexes for a long time, and now we are finally seeing some signs that the gap is closing a little. There is still a huge difference in performance, but it is a good sign to see the relentless selling pressure lift from groups like biotechnology.
My three favorite biotechnology names currently are Xeris Biopharma (XERS) , Aurinia Pharmaceuticals (AUPH) , and Myovant Sciences (MYOV) . I am looking to build them as they develop. I also have some (LABU) ETF for a short-term play.
My Stock of the Week is China EV player NIO (NIO) . Details can be found here.
The key for these secondary groups that are acting better is that they hold up as the day progresses and close strong. There had been no fear of missing out in groups like biotechnology for a long time, but it will build fast if there are any signs of momentum that last longer than a day or so.
This is not a market that can be easily trusted. The computer algorithms can hit quickly, and stocks can reverse fast. It is still too early to build sizable positions.
