The bad news is that so far the market has failed to build on Wednesday's strong reversal and positive momentum. The good news is that it doesn't seem too concerned about all the trade wars and the imposition of tariffs on steel and aluminum.
Market players have learned that bad news just doesn't seem to generate sustained selling. The weakness always turns out to be another buying opportunity rather than the start of a major technical breakdown.
If you are looking for a sign that this market may suffer a deeper pullback then keep on eye on small-caps. The Russell 2000 ETF (IWM) is down just slightly today but it remains very strong technically.
Small-caps are the key because they are the best measure of speculative interest. When market players are willing to take on higher levels of risk they focus on small-caps. When market players have an appetite for risk they buy dips and do not let downside gain traction.
This morning there is some extremely aggressive trading in biotechnology due to positive news from Madrigal Pharmaceuticals (MDGL) . That is spilling over to some other names in the biotech sector and is rewarding more speculative traders.
I see quite a few reversals in some of the strong stocks I mentioned yesterday, which is a sign of some nervousness, so I've reduced positions but I'm still looking for buys. It is just sloppy right now and it is easy to be whipsawed if you are not careful.