We are starting the week with some gap-and-sit action. The momentum from Friday has carried over and created a strong open, but so far, we are seeing a lot of churning after hitting a high in the opening minutes.
Breadth is very good with around 6,350 gainers to 1,675 decliners and will remain strong as long as the morning gap holds up. There are only 30 new 12-month highs and 40 new 12-month lows, which indicates that we are sitting in a trading range right now.
There is strength in cryptocurrency-related stocks after a strong bounce in bitcoin. The crypto miners have been very poor for a while, but they are one of the leading groups Monday morning. Growth stocks continue to do well, too, with ARK Innovation ETF (ARKK) jumping more than 3% on very strong breadth. Biotechnology is trying again but seems to be losing some steam.
Oil and energy have bounced back strongly, but that doesn't seem to be much of a concern on the inflation front, although bonds have lost their momentum, and interest rates have started to pick up again.
What seems to be helping the market the most right now is some optimism about the response to earnings. Goldman Sachs (GS) jumped on its report, and Netflix (NFLX) , which reports Tuesday night, is quite energetic as it builds on Friday's strength.
I've been looking for some new buys, but I don't see anything that I feel is compelling right now. There are plenty of stocks that I like for the longer term, but I just don't feel convinced that this is the start of a sustained uptrend. We seem to be building some higher expectations for earnings reports with this strength, and the chances of disappointment are increasing.
I will keep looking for some new buys, but I have no desire to chase strength that could easily be just another bear-market rally.
