Despite the continuing impeachment drama, the only thing that moved the market Thursday was the number of headlines about China trade.
There was a selloff on some comments about Huawei and there was some buying on news that China is buying agricultural products. A late comment from Chinese Foreign Minister Wang Yi that the U.S. is showing goodwill by waiving tariffs provided a late pop, but sell programs hit in the last few minutes to take the indexes off the intraday highs.
The indexes ended up with just mild changes, but what is most notable about the market lately are the pockets of very aggressive selling. Breadth was about 2,850 to 4,500 negative, but the Biotechnology sector exchange-traded fund iShares Nasdaq Biotechnology Index (IBB) was down over 2% and is a minefield of damage in recent initial public offerings.
The Peloton (PTON) IPO was a disaster. It opened under its IPO price of $29 and never come close to hitting it again during the rest of the day. This sort of action is a good illustration of how speculative interest has dropped. Market players just don't have an appetite for stocks with no earnings and aggressive valuations.
The third quarter comes to an end on Monday and what we are likely seeing under the surface of the market is some massive repositioning. Funds have decided to move out of more speculative and expensive stocks and are dumping names without regard to their individual merit.
The good news is that this sort of action should create plenty of opportunities, but it is very tough if you are trying to hold onto names that are out of favor. Cheap stocks often become even cheaper before they find support.
What is adding to the pressure on individual stocks is that shorts are avoiding the indexes, because of the risk of a positive headline on China trade. They are focusing on individual stocks -- especially expensive momentum names -- instead and that is causing some very ugly action.
The end-of-quarter games will end soon and the China trade meeting will start next week. It will be interesting to see how charts develop as the news environment shifts.
Have a great evening. I'll see you tomorrow.