After the poor close yesterday and further sharp dip overnight, the contrarians did a nice job of jumping on the weakness and spiking us higher. They received an assist from some solid earnings reports from companies such as 3M (MMM), Johnson & Johnson (JNJ), Parker-Hannifin (PH) and Graco (GGG). In addition, consumer sentiment came in better than expected.
With many market players out of position after the poor action Friday, there was some short covering as well as a scramble to put on some long exposure. Interestingly, the high beta, large-cap FATMAN names, such as Facebook (FB), Amazon (AMZN), Apple (AAPL) and Tesla (TSLA), are still in the red. It is mainly the stodgy industrials driving the bounce.
Overall, the big technical picture remains unchanged. Some of the bears were pleasantly surprised by the poor upside follow through on Monday. Typically, these sorts of bounces have a bit more energy, and it looks like the bulls have regrouped for another try. I continue to believe that this bounce will ultimately fail, and that we will revisit $185 on the SPDR S&P 500 ETF (SPY) (it is currently at around $189), but the market beast will suck in some new meat, first.
One of things I really dislike about this sort of market action is that the trades are primarily oversold bounces. There simply aren't position-trade setups, at this point. It takes time for good charts to develop, and we are still struggling to establish a solid low.
Keep in mind that we have Apple (AAPL) earnings tonight and the Fed interest-rate decision tomorrow, so we'll have some interesting catalysts.
I've made a couple of sales into this strength and have found nothing new to buy at the moment.