The indices dipped three times Thursday and three times the dips were bought. Not only was the last dip bought but the buying continued and pushed stocks straight up into the close.
What looked like a day of profit-taking turned into another positive day for the indices, although breadth was still quite negative with about 2,800 gainers to 4,600 decliners.
To start the day, it looked like worries about the coronavirus might matter. There was increased talk about the economic fallout and late in the day the World Health Organization declared the coronavirus outbreak a global health emergency.
Many market players are scratching their heads over the market's reluctance to correct even though it is still technically extended. It seems very logical that this news would be used for some much-needed profit-taking. However, despite a few forays to the downside there is extremely strong support.
Part of the reason for the support is some stellar earnings news from the likes of Intel (INTC) , Apple (AAPL) , Microsoft (MSFT) , and, just a few minutes ago, Amazon (AMZN) . Amazon blew the doors off estimates and the stock is trading up more than $200 or nearly 12%. With that sort of performance, it isn't nearly as surprising that market players are hesitant to press to the downside.
This has been a very tricky environment lately as there have been some clear signs, and good reasons, for selling to pick up, but the pressure fizzles out. When the indices do bounce back the worries about the coronavirus are forgotten. Still, there is hesitancy to chase too much.
Small-cap stocks have been very sloppy, which is why breadth is still negative. While this is a narrow market, it has great support and until that changes the bulls must be respected.
Have a good evening. I'll see you Friday.