The obvious trade Monday morning was to sell the gap-up open caused by well-anticipated news on China trade. But that hasn't worked in the first hours of trading because it may be too obvious, although there is still a chance it may become self-fulfilling.
What is likely to trigger a round of selling is a breach of the intraday lows. Once an opening range is established, trades will look for breakouts in either direction and that will create a little momentum. The greater likelihood is that we end up with "gap and sit" action with both bulls and bears a big frustrated.
If you are an index trader this is a tough call, but for stock-pickers it continues to be a very good trading market.
Both China and biotechnology stocks are doing well. Nio, Inc. (NIO) , which I have mentioned several times recently, is acting well. Also, Uxin Ltd. (UXIN) , another China automobile play, is running hot. In the biotechnology sector I added to one of my favorite stories, Aurinia Pharmaceuticals (AUPH) .
While there continues to be some positive technical action, many names need a rest and could churn a bit. Ideally the "sell the news" trade would gain some traction and we'd have some pullbacks to support levels but the market seldom cares about what I think is "ideal."
It is very tempting to put on an index short to try to catch a dip but battling the bulls is not an easy trade.