With the S&P 500 up for the fourth straight day Thursday and the Dow Jones Industrial Average hitting its highest level since January the focus of market players should be on what can go right rather than what can go wrong. What went right Thursday was some weak inflation numbers and carryover of the bounce that started on Wednesday when it was announced that new negotiations with China on trade would likely resume.
As I've discussed quite often, this market refuses to embrace a negative narrative. There are plenty of them and we even have some choppy action under the surface to give them some weight. Still, there is no sustained selling pressure.
If you want to find some negatives the weak action in banks and underperformance by small-caps were an issue Thursday but they were more than offset by a powerful move higher by market heavy-weight, Apple (AAPL) . There was also a rebound in many China stocks such as Alibaba Group (BABA) that helped the mood.
If China stocks are finally acting better is it possible they are anticipating a breakthrough on trade? While there doesn't seem to be any speculating about that possibility, China has been in a bear market recently and the pressure is now starting to lift a bit as new talks are planned.
The prevailing atmosphere of the market is that there is little choice but to stick with the long side. However, many market players seem to think that some substantial corrective action is around the corner. September trading has been much tougher than what we had in August and that seems to be causing some frustration among traders trying to keep pace with action like we had on Thursday.
There are some reasons to worry but the way to make money is to stay focused on what can go right.
Have a good evening. I'll see you Friday.