Ever since Donald Trump was elected there has been a consistent pattern of news and recovery. The market fears some action that Trump has proposed like bombing North Korea, a trade war with China or bombing Syria. The market struggles on the initial news and then it rallies as Trump backs off from his initial extreme position. Eventually the market ends up higher than when the negative issue first arose.
We saw that scenario play out today as Trump backed down some on both China trade and bombing Syria. Both are still possibilities, but the market used the news of a more nuanced position to justify a rally.
It was a solid rally on good breadth but there was some last minute selling to take the indices off their highs and there was quite a bit of choppy action in individual stocks. My lists of names that closed at the highs of the day was quite short for a market that had this much strength.
As I discussed earlier this was mostly an index driven move caused by an immediate need for some quick long exposure. This was not a day for stock pickers. It was a day to throw money at the index ETFs and FAANG names -- Facebook (FB) , Amazon (AMZN) , Apple (AAPL) , Netflix (NFLX) and Alphabet (GOOGL) -- and hope to keep pace with the movement.
The S&P 500 finished the day near the top of the trading range that has been developing since March 22. There is still overhead resistance but the 50-day moving average around 2690 is the likely short term target for the bulls.
Bank earnings start in the morning with JP Morgan (JPM) , Citibank (C) and Wells Fargo (WFC) reporting. That group did well today as bonds faded and rates rose. The financial group has been trading in tandem with the S&P 500 and will determine where this market is headed tomorrow.
I'm disappointed with the stock picking action in this market but the bulls are doing a nice job of testing the top of this trading range. With earnings coming up they will likely have some ammunition to use to keep pushing.
Have a good evening. I'll see you tomorrow.