Friday's Market Minute: Different Kind Of FOMO Market

We’ve come a long way since the panic in March. At one point on March 12, the VIX hit 90. Fast-forward to this week, the indexes all closed at or near all-time highs, and the VIX closed at 22. Every Monday in November, the market was hit with positive vaccine news from Pfizer, Inc. PFE Moderna Inc. MRNA, and AstraZeneca AN. The Nasdaq 100 index did not take the news particularly well and traditional tech leaders such as the FAANG stocks have not participated alongside cyclical recovery names. The explanation comes from the fact that the technology sector benefited the most from the lockdowns and the changes brought in by the pandemic. In comparison, the Dow Jones and S&P 500 made new all-time highs, while the Russell 2000 has had the single best month in nearly 20 years – up over 19% since Oct. 30. Positive vaccine news triggered a jump in the banking sector, and since financials hold the second-largest weighting in the small cap index at 16.30%, it’s not surprising to see such a rapid advance. November has been the month for SPAC’s, electric vehicle stocks, semiconductor stocks, marijuana stocks, and crypto currencies. Bitcoin is up over 150% this year, with the bulk of the moves taking place in the past 30 days. Only time will tell If the technology sector is justifiably trading at such elevated valuation levels with so many investors on the same side of crowded trades. One of the general unwritten rules of investing and trading is think outside the box and avoid crowded corners. However, it has been my experience that market bottoms are much easier to spot than tops and positive momentum is something to not trade against.