A strong response to good earnings from Apple (AAPL) gave the bulls some ammunition to take the indices to another all-time high, but they squandered their advantage when Fed Chair Jerome Powell didn't provide a fresh round of dovishness.
There were some of the typical bears questioning whether the Apple excitement was justified but the action Wednesday had more to do with the Fed announcement hitting when the indices were extended and ripe for some "sell the news" action. While there wasn't anything overtly negative in the Fed policy statement, stating that the Fed was on hold for a while was not sufficient for this market that is addicted to endless cheap capital.
Market players are in agreement that the Fed isn't going to raise or cut rates for a while. There is disagreement, though, about whether the next move -- several months from now -- will be a cut or a hike. Some economic pundits believe the economy will weaken enough to justify a cut while others, like Goldman Sachs (GS) , believe that things will stay strong enough to justify a hike some time in 2020.
The problem is that the Fed provided no fresh catalyst for stocks Wednesday and the Apple earnings were not sufficient leadership to take the broader market higher. While the market has been trending higher for a while, it has been a struggle quite often and momentum has been narrow. Dip buyers have consistently shown up and prevented any real damage but it's taken a lot of energy to do so.
We'll see now if the bears can build on this poor close. The biggest advantage they have is there aren't a lot of catalysts on the horizon now that earnings are winding down. There is the potential for something on China trade but the greater likelihood is that this will be pushed back or the deal may turn out to be less robust than hoped for.
There is some reason take caution now and play stronger defense, although there hasn't been any major damage done yet.
Have a good evening. I'll see you Thursday.