The best trading tends to occur in strongly trending markets with good leadership and pockets of active speculation. We had a good example of that back in January and there have been a few good periods of such trading in recent months. But the action we have now does not fit this description.
What we have now is action that is inconsistent and choppy. What makes it even more challenging is that the indices are not doing a very good job of reflecting what's going on. Yesterday it looked like the market was exploding higher on the Alphabet (GOOGL) earnings if you looked at just the DJIA, but the underlying action in individual stocks was quite poor.
Today there wasn't any big leadership name pushing the indices. In fact, Boeing (BA) is seeing a disappointing reaction. Yet the tone of trading in individual stocks is much better and there is some big movers on earnings such as GrubHub (GRUB) , iRobot (IRBT) and Vicor (VICR) . Those are the sort of movers you'd expect in a strong momentum market but this is far from being a solid uptrend.
This is not only a difficult market for stock pickers, but it has market timers quite confused. There are plenty of bearish arguments, most of which have to deal with trade issues and the potential for inflation and higher interest rates. Earnings news has generally been good and there is the potential for good news on the trade front. The biggest danger for bears is that there is some deal made with China or the EU. The market acts like that potential is quite high.
Facebook (FB) earnings tonight will give the market another opportunity for some chaotic action. I suspect that there is a 'sell the strength' algorithm that is at work and I'd expected to see strength in FB faded. There also still is dip buying to support anything that is dumped at the open. BA for example is off its early lows.
The key to dealing with this action is to just keep plugging along. Focus on protecting capital but don't be dogmatically bearish and keep looking for reasons for a disaster. There may not be many good chart setups right now but they are developing and the opportunities will present themselves once again.