Don't Try to Guess the Drop in This Stock-Pickers Market
The biggest positive the market has going for it right now is the high level of skepticism.
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Rotation was the name of the game on Tuesday, with the Magnificent Seven losing 0.7% while the Russell 2000 small-cap index IWM gained 0.55%.
Market breadth was positive, with around 5,450 stocks moving up while 4,250 dropped. The most notable aspect of the action was that almost 700 stocks hit new 12-month highs, and there was a very long list of stocks moving up 10%.
The lethargic big-cap technology stocks like Meta META, Alphabet GOOGL and Amazon AMZN helped to keep sentiment suppressed, but if you ignored the indices, it was very upbeat and bullish action for the majority of the market.
The bears are growling about valuations and extended charts, which is impacting some of the high-flying technology names, but that money is not leaving the market. It is rotating into other areas of the market that are still quite healthy.
There wasn’t any major news flow on Tuesday, and there were no new developments on the tariff front, but that is an issue that is going to continue to generate some volatility.
The biggest positive the market has going for it right now is a very high level of skepticism. Buyers are cautious, but when stocks act like they did on Tuesday, there is fear of missing out, and some of that idle cash is put to work.
There are some very compelling bearish arguments right now but stay focused on the price action and don’t try to anticipate a market top. The real story is in individual stocks and not the indices. This is a stock-pickers market and not a market-timers market.
Have a good evening. I’ll see you tomorrow.
At the time of publication, DePorre had no positions in any securities mentioned.
