The indices are ripping higher on very strong breadth on optimism that a trade deal with China will be announced this afternoon. Quite a few market players have anticipated that the negotiations would be a failure and they are adding to the upside as they cover shorts and try to find some long exposure.
Apple (AAPL) is benefiting from the desire to put big money to work very fast. It is hitting a new all-time high and is driving the major indices.
There is buying across the board right now but the question to ponder is how much to chase into the trade announcement. This is becoming a very obvious 'sell the news' setup and the potential for some profit taking as the trade news is digested is very high. It is a certainty that the deal is going to be harshly criticized by many pundits no matter what it might be.
While I believe it is very likely that there be some 'sell the news' action it is not likely to be an easy trade. I expect some whipsaws and I expect that those that have missed out on the upside this week to provide fairly fast, buying support next week.
The ideal scenario is that with less focus on the macro movement caused by trade negotiations there will be an increased focus on individual stock picking. With third-quarter earnings starting next week it will be a good time to focus more on the merits of individual stocks.
My game plan is to look for 'sell the news' action to create some good entry points. I'm working harder on my shopping list and will be ready for weakness on Monday.
This has been a very tough trading environment and there are many broken stocks that are groping for support. The potential for some sustained bounces into earnings is going to be my prime trading focus.
One example of a broken name I added this morning is SmileDirectClub (SDC) . There are many more.
As I write this, news is hitting that the Fed is going to start buying $60 billion in Treasury Bills per month starting next week. This is further fuel for the bulls and will be supportive of a focus on stock picking.