The market may be close to setting a record for the number of successive days that the same news is deemed responsible for the market action. Whether the indexes are up or down, it is China trade news that receives the credit or the blame.
The China trade deal is the stock market equivalent of "The Myth of Sisyphus." Sisyphus was condemned by the gods for eternity to repeatedly roll a boulder up a hill only to have it roll down again once he got it to the top, In the stock market, we are condemned to repeatedly watch stocks rally on trade news, only to have them pull back when the deal is not done. Over and over the pattern repeats and it feels like it will last forever.
After three days of selling, the indexes rallied nicely with optimism and used trade as the excuse. There were not many details, but basically Bloomberg News reported that a "phase one" trade deal with China could be completed before the Dec. 15 trade deadline.
The details aren't particularly important. The market was in a good place for a bounce and the news provided an excuse. Breadth was very good with 5,300 gainers to 2,100 decliners, but what was most impressive were the pockets of strong momentum. There were a large number of stocks moving up more than 1% Wednesday, with the majority of them in the biotechnology sector.
Traders were trying to put money to work and that led to some healthy speculative action. Whether they continue to run back up or roll back down will depend on the next trade headline, but the important thing is that trade issue is going to persist and that anyone betting against some positive headlines will have some difficulty.
Technically, Tuesday's gap down in the Spdr S&P 500 exchange-traded trust (SPY) was filled, but that created another gap this morning. It is an odd pattern, but yesterday's lows now become the key technical support level.
The action in the indexes is a mess, but the trading in individual stocks helps to offset that issue. There is an obvious desire to find some place to put some cash and that is producing some good action in individual names. If you buy good charts and manage the trade well, then the risk that is in the indexes is not as worrisome.
I don't know what the market is going to do next, but I'm almost positive that it will be a headline about China trade that will be responsible for the move.
Have a good evening. I'll see you Thursday.
