The S&P 500 managed a very small gain Wednesday but it was the second day in a row with intraday weakness. It isn't apparent on the daily chart but on the intraday chart there was a small shift in market character.
Tuesday the market struggled with the news of the coronavirus in China. That seemed to be shrugged off at the open Wednesday and was followed by some strong housing numbers but the S&P rolled over a little over an hour into the trading day and trended mostly lower the rest of the session. The close was near the low of the day with breadth just slightly positive.
The action of the last two days hints at some shifting in market sentiment although, typically, the bears have had a very hard time building on weakness. There has not been any notable downside momentum in the market since late July and early August 2019 and that hardly lasted a week.
The primary question now is whether earnings reports will act as a negative catalyst. Netflix (NFLX) was a negative Wednesday but IBM (IBM) helped to keep the DJIA close to flat. Texas Instruments (TXN) just reported and the initial reaction there is negative despite an EPS beat.
This market needs a pause that refreshes. It is a mistake to be too negative too quickly at the first sign a little weakness. The market has not had much ebb and flow for a while so there is some relief when the action isn't quite as a lopsided.
There will have to be much more negative action before the current uptrend is under pressure.
Have a good evening. I'll see you Thursday.