Although the Dow Jones industrial average and S&P 500 were close to flat for the day, it was a very good day for traders, as growth stocks, and speculative small caps perked up nicely. Sectors like biotechnology, electric vehicles, crypto-related non-fungible token names, and cannabis attracted interest, and stock pickers were rewarded for their efforts.
This sort of trading isn’t uncommon leading into a holiday weekend. The positive and upbeat mood helps to create some self-fulfilling action. It also doesn’t hurt that the vicious rotation out of growth and into big-cap value names seems to have come to an end. Even the ARK Innovation exchange-traded fund (ARKK) is looking much better, with a solid gain of nearly 2% today.
The big question is whether we can build on this action into the weekend. The longer it holds up, the more it will produce some Fear of Missing Out (FOMO). Many traders were hurt badly in the recent meltdown and have been slow in remounting, but action, like we have today, is going to suck in some cash from the sidelines.
As always, we don’t want to be overconfident, but this is much-improved price action, and many stocks have solid support and are not at all extended. It is a good setup for more positive action in growth stocks and speculative small-caps.
Have a good evening. I’ll see you tomorrow.