Biotech and the Dow Soar, Data Centers Crash in Strange Market Brew

The indexes ended Tuesday with small gains, but there was a very odd mix of action. Breadth was 54% positive, and there was a healthy number of new highs at around 230. Despite the strength, the Magnificent Seven  (MAGS)  lagged, with a 0.3% loss, and the data-center group was hit particularly hard, with names such as IREN  (IREN) , CoreWeave  (CRWV) , and Nebius Group (NBIS)  suffering declines of more than 5%.

What was particularly interesting was that the Innovator IBD 50 ETF  (FFTY) , a growth-stock proxy, took a 2.3% hit. At the same time, the iShares Biotech ETF  (IBB)  rampaged to a new multiyear high, gaining nearly 3%. It is very odd for these two groups to move in opposite directions, since they both tend to attract aggressive speculative traders.

There was some chatter making the rounds that a shakeup is coming to the FDA, which helped to drive the action. The FDA has been severely criticized lately for its inconsistent actions, and there is widespread unhappiness about the way it has treated some of the most innovative companies, such as uniQure N.V.  (QURE) . QURE jumped nearly 20% on the day on rumors that changes may be coming to FDA leadership. Late in the day, the Washington Post reported that oncology expert Richard Pazdur would be named the FDA’s top drug regulator.

Another odd occurrence was the DJIA's extreme outperformance,  gaining 1.2%. Only three of the 30 Dow names were negative compared to the Nasdaq 100  (QQQ) , which had breadth close to even.

It is chaotic rotational action, which isn’t a great sign of strong trends, but it does offer good trading opportunities for those with a short time frame. I’ve been increasing cash levels lately as I've become more aggressive about taking profits when I have them.

Have a good evening. I’ll see you Wednesday.

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