Reuters is reporting that the Phase One U.S.-China trade deal may not be completed before the end of the year. There isn't any clear statement from the Trump administration but doubts about the deal being done quickly have grown to the point where the market is no longer believing the endless stream of optimistic platitudes.
The indices have been flirting with some corrective action and this story pushed them off the ledge. Algorithmic selling likely contributed to the quickness of the selloff.
The market's tendency for many months now is to not only bounce back from such news but to eventually go even higher when optimistic statements about progress are made. However, market players may be growing weary of this game and with the market already in position for some corrective action, the bounce may not come as quickly as many traders are hoping.
I expect to see the dip buyers sniffing around as the news is digested and we'll see what fuel they have into the close. As I discussed this morning, the dip buyers will determine the health of this market. If they don't step up quickly and recoup some of this loss by the end of the day then look for downside momentum to build.
For many market players, corrective action at this point is a positive rather than a negative as it sets up better technical conditions for a bounce into the end of the year.
I bought some Amarin (AMRN) on this sharp drop and am looking for other candidates. The bounce has already started as I write.
