Choppy Market Action Isn't Favoring the Small-Caps

Pockets of momentum are narrow Tuesday as rotation continues.

Breadth is running ahead of Monday with around 4,700 gainers to 3,100 decliners, but we have more rotational action taking place.

Financials are a bright spot, and Bitcoin and related names are reversing after a strong open. There is still some good speculative action in de-SPAC names such as IonQ (IONQ) and Redwire (RDW) , but it is mixed. Pockets of momentum are quite narrow, with only a dozen or so names up more than 10%.

It isn't bad action, but it is choppy, and there is a notable lack of bids in some of the smaller names. A few of my longer-term favorites like Performant Financial Corp. (PFMT) , Ammo, Inc. (POWW) , urban-gro, Inc. (UGRO) , Beyond Air (XAIR) , and Elys Game Technology (ELYS) have no buying interest at all. They all have very solid fundamental stories, in my view, but there is no interest in accumulating them until someone else shows some interest. It is a good illustration of how fundamentals can be totally irrelevant for long periods of time. The poor price action creates fear and uncertainty, and the constant drip of selling keeps pushing them down. I'd like to add to all those positions, but not until there is some better price action first.

One name I added over the past week is Zim Integrated Shipping Services  (ZIM) . This company has some spectacular numbers, but there is fear that the huge profits that shippers are generating won't be sustained. My guess is that the demand for shipping is going to stay elevated for longer than what the market is pricing in for a stock like ZIM.

I'm looking to put more money to work, but we probably need more choppiness and consolidation before conditions will be better. This is a good market that is just taking a rest.

At the time of publication, Rev Shark was long, IONQ, RDW, PFMT, POWW, UGRO, XAIR, ELYS, and ZIM.

Please note that due to factors including low market capitalization and/or insufficient public float, we consider several of these names to be a 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.