The senior indexes finished the day with mixed returns, but under the surface, there continued to be pockets of strong speculative action.
The Russell 2000 led the way Monday with a gain of more than 1%, which is reflected in breadth of around 5,775 gainers to 2,450 decliners. There still are very few new 12-month highs and lows, but we finally are seeing the number of lows contract to just 30 symbols.
Most notably Monday, small speculative traders were gunning the meme stocks, including Bed Bath & Beyond (BBBY) , GameStop (GME) , and AMC Entertainment (AMC) . They are targeting some of the stocks with high short positions and are having some success.
Biotechnology also continues to attract speculative interest as there have been several recent takeovers in the sector. This group was the leader to the downside for well over a year, and now it is a leader to the upside off the lows hit in June.
The market continues to benefit from poor positioning, short squeezes, and fear of missing out. The bullish narrative is that inflation has peaked, and strong employment increases the likelihood that a recession can be avoided even if the Fed does hike rates aggressively. Many bears disagree quite strongly, but they are on the wrong side of the price action right now and are struggling not to suffer too much damage while waiting for the buying to cool off.
The CPI and PPI reports that are due out on Wednesday will be particularly important, and we should see more positioning on Tuesday in front of the news.
Have a good evening. I'll see you Tuesday.