Now That's What I Call Healthy Bull Market Action
Two big earnings reports Tuesday from Alphabet and Tesla will tell us a lot, but this latest dynamic should be encouraging to stock pickers.
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Monday morning started with speculation about how the changing political picture would impact the market. There was some talk that Vice President Kamala Harris would give the Democrats a better shot at winning and that would hurt the so-called Trump Trade. However, that was forgotten quickly after the open, and we ended up with some generally good action.
The day began with a dip in the Russell 2000 IWM and rotation back into big-cap technology and the Nasdaq 100 QQQ. The QQQ stayed strong all day and finished with a gain of 1.5%, but the good news is that the Russell 2000 went from red to green and also closed with a gain of around 1.5%. Breadth was very good, with around 7,000 gainers to 2,300 decliners, but new highs were down to around 230 after the recent pullbacks.
This was bull market action and illustrates that market players are rotating into secondary stocks and creating healthier market action. It wasn’t just another case of narrow, big-cap leadership. If this dynamic continues, it will be quite promising.
We have a couple of big earnings reports on the schedule after the close on Tuesday that will help to set the tone, but if rotational action is gaining traction, then a sell-the-news reaction to Alphabet GOOGL or Tesla TSLA may not be a bad thing for overall market health.
I’m encouraged by the market action today and will be looking for places to put more cash if it continues.
Have a good evening. I’ll see you Tuesday.
At the time of publication, Rev Shark had no positions in any securities mentioned.
