Intraday momentum is slowing and now the issue is how well things will hold up into the close. The close on a day like this is extremely important. A weak finish will lend weight to the bears' contention that this is just an oversold bounce that shouldn't be trusted. If things close strongly, then the bulls will claim the V-shaped move is back in play.
One of the hardest things traders have faced in this market is trying to gauge what will serve as a catalyst. Nothing political has bothered this market until last week when the North Korean issue came to the forefront. Today that issue is barely being mentioned. It is a good example of how this market will react to catalysts in a very limited timeframe.
The news media are intently focused on President Trump's reaction to the events in Charlottesville, Va., over the weekend but this is having no impact on the market action. It has been very easy to let political thinking cloud your view of this market if you aren't conscious of separating the price action from the news coverage.
Bounces like we are seeing now are very hard to chase. The inclination is to shy away from new buys since you missed the easy buy at a lower price, and it is hard to trust in V-shaped moves anyway. If you want to stay heavily in cash at this juncture, it isn't hard to find justification.
One new stock I'm watching today is Jupai Holdings (JP) . This is a China-based asset manager that is definitely under the radar. The stock has trailing earnings of $1.36 and is trading with a trailing PE of just 7. It is due to report earnings soon and has recently seen a big jump in earnings. It is thin and, like most China names, can be dangerous.
