Horrendous Trading Action Continues

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Although the S&P 500 and DJIA are in positive territory once again, the underlying market action Friday is deplorable. The FATMAAN names and bitcoin are joining the small-caps with some ugly action.

I cannot recall when there has been such a significant disconnect between the senior indices and the action in so many individual stocks. There are hundreds of broken charts, but they are offset in the indices with a couple of big-cap names such as Home Depot (HD) , which is ridiculously extended and still trending higher.

When I look at charts like that, I can’t help but wonder if there is another big fund using extreme margin to drive that sort of movement. It is so inconsistent with the rest of the market — the action can’t be related to superior fundamentals. There are thousands of stocks that are bidless right now, and there is no interest or energy, but a small group of stocks like Home Depot have gone parabolic.

This will eventually reconcile itself, but there is no way to guess how that will occur. Will a Home Depot correction spill over and impact the entire market, or will money rotate back into the laggards? I don’t have the answer to that question.

The good news is that there are many stocks with solid fundamentals being sold without regard to their individual merit. Sooner or later, they will find support, but it doesn’t look like it is going to be Friday.

I see nothing to do here except exercise great patience. It is too early to do any aggressive bottom fishing, and it is far too late to chase charts like Home Depot. It makes for miserable trading, but that is just part of the cycle of the market at times.