'Sell the Trump Presser' Can't Hold; Dow 20K on Thursday?

 | Jan 11, 2017 | 4:30 PM EST
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The "sell the Trump press conference" trade worked for about two hours but it was probably too crowded. It was an obvious setup and when that is the case there are always dip buyers lurking. In fact, it is very likely that there are algorithms now in place to buy the Trump-created dips.

There certainly isn't any sustained momentum when the market reacts to a negative Trump comment. Once the indices started to bounce it helped to create a squeeze into the close and a very strong finish.

The biotechnology sector suffered some damage, which is a bit worrisome, but by the end of the day breadth was solidly positive again and the indices back to the highs of the day. The Trump press conference only created a little intraday volatility.

While it was a solid recovery for the indices, the issue lately is it's becoming increasingly difficult for the market to gain upside traction. Leadership is poor, with few clear themes, although it keeps the indices up. There are setups to be found but it is a constant debate over whether to take a trade you don't like that much. As a result it is very challenging to put cash to work.

With the strong close today it is very likely we are going to hear about Dow 20,000 again Thursday. The DJIA is only about 50 points away again and the fourth or fifth time may be the charm. The conventional wisdom is that the market can't undergo a substantial correction until that level is taken out first so we shall see.

Although the indices are holding well and give the market an appearance of complacency, it has been a tough market to trade lately. The rotation, lack of leadership and the swings on Trump make it hard to catch sustained moves. At this juncture, it appears the bears might end up being squeezed once again.

Have a good evening. I'll see you tomorrow.

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