All the major indices finished in positive territory again Thursday except for the DJIA, which was weighed down by IBM (IBM) after it reported poor earnings on Wednesday night. The S&P 500 is now up seven days in a row and is at a new all-time closing high.
Market players are often puzzled by how sticky a strong market can be to the upside. What happens is that the strong action creates a supply of new buyers that all want to buy on some sort of pullback. They keep waiting for the pullback, but when it doesn't come, they start putting some money to work and keep the rally going.
Although the indexes were largely green, breadth was negative, with about 3,700 gainers to 4,300 decliners. What was most interesting about the trading were the wild pockets of speculation. Digital World Acquisition Corp. (DWAC) went crazy on a SPAC deal with Trump Media and saw record volume for a SPAC on a deal announcement. There was an obvious political element to this trading that helped to intensify the action.
There was a fair amount of other speculative action as well and some good stock picking. Market players are digging around for places to put money to work, and that is what causes pockets of momentum to develop. The problem with trading a name like DWAC is that it sucks up a lot of energy. Meme names such as GameStop (GME) and AMC Entertainment (AMC) did poorly Thursday as money rotated out of those names and into DWAC.
After the close, Snap (SNAP) posted a surprisingly weak earnings report and is down almost 25%. Facebook (FB) is selling off in sympathy and is down around 6%. This is likely to trigger more rotation out of stocks that benefited from COVID as their businesses return to a more normal trajectory.
Have a good evening. I'll see you Friday.