It looked like yet another steady day of gains for the indices Tuesday morning but following the gap-up open stocks peaked a half-hour into trading and then drifted lower the rest of the day. There wasn't even the spike of buying into the close.
The funny thing about this market is that it has been so strong for so long that even very mild selling is viewed as significant. The S&P 500 stayed green, breadth was 5,100 gainers to 2,300 losers, and there were more than 900 stocks hitting new 12-month highs. However, the fact that stocks did not accelerate higher intraday gave hope to some of the people looking for a pullback.
One of the great ironies of this market is that it has been running higher for so long without any real rest that even the bulls are praying for some downside. They aren't worried that the market is going to top. They just want some better entry points and dips to buy.
A slight intraday reversal is a minor change in market character but it is not nearly enough to signal that a major change is about to occur. It is often said that a top is a process and in this case, there are still no signs that the process has even started.
The likelihood is that there will be a strong inclination to buy any dips from this point and that it will take several failed bounces before a real topping process takes place. Buyers are well conditioned to buy any and all weakness. Not even the coronavirus can discourage them.
This market certainly would be easier to trade if there was some downside volatility, but the fact that so many others feel the same way is part of the reason why it doesn't occur.
Have a great evening. I'll see you Wednesday.