Holiday Trading Phenomenon Takes Hold as Investors Await Key Jobs Report

A typical market phenomenon in front of holidays like July 4 is an increase in speculative trading in secondary stocks. There are indications of that on Wednesday as aggressive traders take advantage of a thin trading environment while institutional investors are busy planning their long weekend in the Hamptons.

There is active trading in bitcoin miners, some SPACs, quantum computing names, and a few other themes. These are not "quality" stocks, but typically, traders gravitate toward the names with the most action and are willing to chase when "holiday" trading takes hold.

Another interesting phenomenon recently has been that the market has consistently started off weakly and then gained strength throughout the day. That is occurring again Wednesday as the indexes are moving up with the S&P 500 and Russell 2000 IWM leading. Breadth is positive, but the number of new 12-month highs has dropped quite a bit to around 225 names as money rotates out of leaders and into lagging and secondary stocks.

Market players are ignoring problematic economic news once again. The ADP employment report was substantially weaker than expected. This report is often ignored, but it does raise some concerns about the June employment report due out on Thursday morning. The market is still not willing to embrace the viewpoint of the economic bears, but a steady diet of weaker-than-expected news will eventually matter.

While the Magnificent Seven MAGS names are bouncing back Wednesday, with the jobs report looming and then the long weekend, I don’t expect to see aggressive momentum at this point.

I am starting preparations for earnings season and devising plans for my various holdings. I expect that there will be an inclination toward "sell the news" this quarter, but there are also quite a few stocks that are languishing from a lack of news flow.

At the time of publication, Rev Shark had no positions in any securities mentioned.