The primary battle in this market right now is not between bulls and bears. The battle that is raging is between stock pickers and market timers and the stock pickers are winning.
There is a large group of market participants that are intently focused on trying to time a market turn. They are struggling to reconcile a very steady and sizable uptrend off the March lows with the raging Covid-19 crisis and a crumbling economy. The thesis for a market correction is so obvious that you have to wonder if that may be a reason that it is not working.
The problem that the market timers have isn't that they don't have good arguments. The problem is that the majority of market participants don't care. Their focus is on finding good stocks that continue to trend upward. There has been plenty of great opportunities and even the amateur retail traders are doing well. Whey should they worry about things like GDP, unemployment, and valuation when there are so many 'good' stocks to choose from?
That is the essence of the market battle right now and it will face an interesting test tonight when some of the leading FATMAAN names report earning. Can those reports turn the tide of the market and finally put the market timing bears in position to gain momentum?
I'm not betting on it. Even if there is some 'sell the news' reactions to earnings tonight, I believe that the stock pickers will simply rotate into other areas of the market. If we do see a correction, it is likely to be a rolling correction and that will cause great frustration for those that are too focused on the indices.
From a stock-picking standpoint, I like seeing some weaker action as it provides some opportunity for charts to develop better. I'm not doing very much right now but I expect trading to remain robust once we are past the big earnings news tonight.