Traders were challenged by some highly unusual rotational action earlier this week and Thursday they are being challenged by market-moving headlines.
First, there was the announcement of a delay in tariffs on China for a couple of weeks, then there was the European Central Bank interest-rate policy news and then there was a headline on Bloomberg that Trump advisors are considering some sort of interim deal with China to delay or even roll back tariffs while negotiations continue.
Market players had started to sell the early news but the third headline caught them by surprise and the indices spiked to the highs of the day. Traders are now trying to figure out exactly what this means and how an interim deal might work.
However, as I write this, a new headline is hitting that the Trump administration is absolutely not considering an interim deal. The indices have reversed back to the lows of the day and the potential for the opening gap to fill is high.
Regardless, what is obvious here is that President Trump is growing concerned about the economic impact on the tariffs. He is no longer claiming that they are totally paid for by China. Farmers and other groups are obviously suffering and the political calculus is becoming more difficult.
Trade negotiations are still a couple of weeks away and we'll see how confident the market is that some real progress can be made. This is the sort of news that keeps a bid under the market and makes it very difficult for bears looking to press short positions.
In addition to dancing around to these headlines, another complication is that the small-caps that led Wednesday are lagging today. It is mild rotational action but it is a complexity that makes is harder to find a trading edge.
I'm put on some index shorts in the form of ProShares UltraPro Short S&P 500 (SPXU) and have added some precious metals positions. This inconsistency is making it a very challenging market.