For quite some time now, active market participants have been flummoxed by the incredibly narrow and persistent strength in the market. Tech, particularly the biggest and most popular names in that sector, have been on an absolute tear, while much of the rest of the market has either done little, or really struggled.
Chasing strength in a narrow group of stocks has been a winning approach for weeks now, so it’s likely that there were some unhappy investors Friday afternoon when the QQQ put in the big reversal off more fresh highs. However, it was a breath of fresh air for active investors who have been frustrated lately by the slow creep higher and narrow intraday ranges.
This has been a oddball market for a while, and it’s become increasingly tempting lately to wonder if “Something Big” is about to happen. The early Friday morning strength and the big reversal off extended highs in the most frothy areas is notable, but there was a clear rotation into other areas, so it’s tough to infer that we’ve reached the major turning point that the bears have been praying for for so long. Immediate dip buying has worked for a while now, but things could get interesting if that approach starts not paying off.
Let’s take a look at some charts.
At the time of this post, RevShark had no position in any of the stocks mentioned.