Although Intel (INTC) is weak Friday morning after issuing soft forward guidance, stocks around the world are trading in positive territory and early indications are to the upside in the U.S.
There aren't any obvious positive headlines driving the upside open, but market players are shrugging off some pessimistic comments from Wilbur Ross about China trade and are focused instead on some positive earnings news. The government shutdown issue continues to create uncertainty, as there is talk that President Trump may try the 'National Emergency' gambit to bypass Congress, but there is still hope that a deal may be reached.
Earnings have been good enough to help offset growing concerns about slowing global growth, but it is surprising that Intel is not having more impact this morning. Intel is one of the few stocks in the market that tends to generate strong sympathy. Its products are a basic component of much of the economy, so its fortunes are viewed as indicative of the health of many other companies and industries. Intel's earnings have marked major turning points in the market in the past, but this morning the report doesn't seem to be of much overall concern.
Over the last three days, there has been a shift in the market action and the big issue now is where that is heading. We have gone through a nasty downtrend and a hefty bounce and now there are some signs of indecision. On Thursday, there was an odd mix of action, with strength in semiconductors not helping the indices much but strong breadth helping to keep the mood positive.
It is likely we are heading to a period of trading range action as the market grapples with earnings news, China trade and several other major political issues. A potential economic slowdown is the gorilla in the room -- and that narrative has been gaining more traction. It isn't impacting the indices right now, but when we do see downside again that is going to be the explanation given.
On Friday morning, the market is shrugging off China trade worries and Intel's soft earnings report, but there is more talk about slowing global growth again. It looks like there is some short squeeze helping to produce some early upside, but it is going to take some effort to build on this strength. "Good earnings" are receiving the credit for positive action, but there are too many other issues lurking.
One thing keeping a bid under this market is that the bears are afraid of being caught leaning the wrong way should there be a breakthrough on the government shutdown issue. The market is very likely to spike higher on such news, even though the indices have never had a negative reaction to the shutdown. The pressure for a deal is building fast as the plight of the laid-off government workers becomes harder to ignore.
I'm inclined to use opening strength for some selling, but there is some trading in individual stocks that looks good regardless of overall market direction.