Major averages clawed their way back on Friday after gapping lower at the open to finish roughly flat at the top end of their respective trading ranges on mixed volume. Friday marks the eleventh day up in a row for the Dow Industrials. Some further digestion of gains as we have mentioned previously could be expected.
Friday's gap down at the open was a great place to take profits on any short positions then wait for weak rally attempts to possibly reinstate short positions. As we like to say, stocks take the stairs up and the trap door down especially in these environments. But unlike prior cycles, stocks often find a floor within a day or two of their drop so taking profits when you have them when it comes to shorting is key in this environment.
Fund managers remain in FOMO mode (fear of missing out), so while traders bail on leading stocks in a heartbeat, hitting them hard for a day or two, the bifurcation remains between the market averages which may only correct a couple of percent before finding a shallow floor compared to the more pronounced correction in some leading stocks.
There's the quick and there's the dead when it comes to the short-lived but sharp selloffs in leading names.
This information is provided by MoKa Investors, LLC DBA Virtue of Selfish Investing (VoSI) is issued solely for informational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. Information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of available data. VoSI reports are intended to alert VoSI members to technical developments in certain securities that may or may not be actionable, only, and are not intended as recommendations. Past performance is not a guarantee, nor is it necessarily indicative, of future results. Opinions expressed herein are statements of our judgment as of the publication date and are subject to change without notice. Entities including but not limited to VoSI, its members, officers, directors, employees, customers, agents, and affiliates may have a position, long or short, in the securities referred to herein, and/or other related securities, and may increase or decrease such position or take a contra position. Additional information is available upon written request. This publication is for clients of Virtue of Selfish Investing. Reproduction without written permission is strictly prohibited and will be prosecuted to the full extent of the law. ©2021 MoKa Investors, LLC DBA Virtue of Selfish Investing. All rights reserved.