Speculation that U.S. Senate leaders were working toward a deal on the government shutdown helped the DJIA to bounce 90 points in the last minute of trading, but it was still the first time the indices closed lower than they opened since January 3.
Larry Kudlow, head of the National Economic Council, also made an effort to boost the indices in the final minutes of trading when he denied that there were cancellations by Chinese leaders that are scheduled to negotiate at the end of the month. The market perked up on the news but didn't act as if was convinced.
From a trading standpoint it was refreshing to see a shift in the pattern of intraday strength. The indices have become grossly overbought and that made new buying very difficult. The bears like the downside action for obvious reason but it is also beneficial for bulls that need some consolidation and resets for a stronger foundation.
Technically there is plenty of room for the indices to pull back from here but, as I discussed this morning, hopes over China trade and a deal on the government shutdown make it dangerous for the bears to push too hard. The market could easily spike up substantially on any news headline on either issue.
Earnings report are rolling in with serial disappointer IBM (IBM) trading up around 5% on some good numbers. The company increased guidance slightly and expectations there were quite low.
The market has gone from one extreme to the other, but hopefully we will see action now that will lead to more variety. It has been a tough market for stock pickers when everything moves in tandem and goes quickly from oversold to overbought.
Have a good evening. I'll see you tomorrow.