For most of the day, the indexes moved steadily higher on a wave of complacency. There wasn't any specific news to drive the buying, but whenever there is a series of upticks it tends to spark FOMO -- fear of missing out. The negatives are forgotten and it feels like there will be a "V"-shaped move higher.
Unfortunately for the chasers, the buying fizzled out about 45 minutes before the close as a couple of Fed members made comments that crossed the news wires. The comments were not overtly negative, but they did provide a reminder that the economic challenges are still quite formidable.
This sort of price action is extremely difficult to trade. It is a very shallow action without any real substance and it can turn very quickly without any warning. The news flow might matter one minute and be ignored the next. If you are looking for entry points, the charts provide little unless you are willing to chase.
Overall the action Tuesday proved to be meaningless. The indexes finished within the trading range that has been developing over the past week and left the technical picture unclear.
There are a number of earnings reports hitting after the close with Disney (DIS) holding much interest. Disney missed on earnings, but beat on revenues. The stock is up slightly after hours as traders try to figure out if a $1.4 billion Covid-19-related loss in quarter two is going to matter or not.
The great difficulty of this market in the days ahead is trying to figure out if the economic negatives will matter or not. One day they matter, and the next day they don't. There is no way to know in advance whether optimism or pessimism will prevail.
Have a good evening. I'll see you tomorrow.
(DIS is a holding in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells this stock? Learn more now.)
