The market is trading stronger Wednesday morning following good reports from three DJIA components. IBM (IBM) is surging 8%, while United Technologies (UTX) and Procter & Gamble (PG) are up 5%. This is having some spillover effect to the broader market.
However, what is probably having more impact is the anticipation that there could be a positive headline on either the government shutdown or China trade.
Even though the market has essentially gone straight up after the shutdown there is very likely to be a spike higher if a deal is struck and the impasse ends. The shutdown is obviously going to affect economic growth the longer it continues and while the market doesn't seem concerned, it will still celebrate when that is lifted. It is tough to be aggressively short when that news could hit at any time.
Tuesday, we saw how the market dances around to any news on trade. The indices sold off early on a report that there were some meetings cancelled but then it bounced at the close when those reports were denied. Even if you are skeptical about how easy it will be to get a deal done there is still much risk of a spike higher on any favorable headline.
The end result is that you can't bet aggressively against this market because of the potential for a big headline. On the other hand, chasing stocks higher here is tough if you have a holding period longer than a few days.
The indices are losing some steam as I write and it will be interesting to see if they close lower than they opened for a second straight day.