Although there is plenty of skepticism about a fiscal stimulus agreement, the market is holding up well, with small-caps ( (IWM) ETF) leading the charge with a gain of 1.2%.
The small-cap strength is reflected in breadth, which is running better than 3 to 1 positive. New 12-month highs are quite low at around 50, which is caused by a lack of strong momentum in big-cap technology and FATMAAN names.
What is going on out there is that market players continue to be optimistic about the prospects of individual stocks into earnings. Many of the strong names on my radar, such as Nautilus (NLS) , Pacific Ethanol (PEIX) , and Personalis (PSNL) , should put up very good numbers and that is being anticipated.
As I discussed Monday, I'm trying to cut back on some of my positions and be a bit leaner and meaner as we head into election volatility, but overall price action remains positive and I'm not inclined to cut stocks that aren't doing anything wrong at this point.
While news of a fiscal stimulus deal is going to move the market in the short term, I'm not convinced that it will produce sustained selling if it fails to occur. Sooner or later some sort of stimulus will happen. The issue is whether it comes before or after the election.