The indices gapped higher to start the day on positive headlines about progress on China trade. After some initial selling into the strength, the buyers stepped up again and now have the S&P 500 at another all-time high.
Breadth is running better today with 4450 gainers to 2625 decliners, and there are 430 stocks at new 12-month highs which is still light for a market this strong but not terrible. Semiconductors are leading due to Applied Materials (AMAT) and Advanced Micro Devices (AMD) , while Nvidia's (NVDA) reversal is being ignored.
What is most notable about this market action is that it never seems to fully discount the optimism about a China trade deal. Even though the market seems to have already accepted the fact that a deal will be done, there is still buying on every positive headline.
That isn't very rational but it is a function of how computer algorithms operate. Trying to determine what might be a 'fair value' is a useless strategy in a market that only cares about price action. It is the 'flow' of the action that matters far more than valuation or fundamentals.
The most important thing to know about the market action right now is that it is price driven and that the algorithms continue to buy every single dip no matter how minor. As I discussed in my opening post, there has not been a pullback that has lasted more than an hour in nearly six weeks.
It is remarkably lopsided but it is impossible to guess when it comes to an end. If you are looking to try to catch a reversal the best strategy is to be highly reactive to weakness rather than try to anticipate when strength might end.