Fed Chairman Jerome Powell caused a sharp intraday drop on Friday when he commented that inflation may not be as transient as he previously indicated. It’s not a big surprise, but it was a good excuse to sell. Stocks rebounded rather well, but the S&P 500 ended with a small loss that shattered its seven-day winning streak.

The magnitude was negative with around 3,650 winners to 4,400 losers, which was reflected in the underperformance of the Russell 2000 Exchange Traded Fund (IWM). There has been wild speculative trading again, mostly in the special purpose acquisition group, but many small caps continue to struggle with the lack of offerings. They haven’t seen massive sales, but there is a glaring lack of deals in many names.

It was not an easy market to trade as there was a turnaround and choppy action. Indices have been stable, but individual stocks have been volatile, and there are a lot of landmines like SNAP (SNAP). There have been at least eight explosions in the biotech industry this week.

The indices rose throughout the week which left things a bit overbought, but the good news is that there is now a clear uptrend and momentum has strengthened. This action creates very good charts, and with the anticipation of strong earnings reports, there should be some positive price action.

I remain optimistic about trading until the end of the year, but it is not a buy and hold environment. You have to work on the trades and be very aware of the news flow. I will be discussing new purchases next week.

Have a good week-end. I’ll see you on Monday.

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