Good markets have strong underlying support and stay sticky to the upside. We had a good illustration of that Wednesday as neither overbought technical conditions nor a headline about a delay in the signing of a China trade deal had any meaningful impact on the indexes.
Under the surface, the action was not quite as strong, but the indexes came back very quickly from a minor intraday selloff. There was more weakness in small caps, but this was due more to disinterest than a run for the exits.
The indexes are still overbought and could use more corrective action, but it looks like that is going to occur by running in place, rather than pulling back. The gap formed on the S&P 500 chart was filled almost perfectly, but the dip only lasted a few minutes.
This action is frustrating for both bulls and bears. The bears continue to be flabbergasted that the market is ignoring their very compelling negative narrative and the bulls are anxious for the routine corrective action to come to an end, so they can be more aggressive with buys.
The most positive thing that can be said about this market is that if the bears can't do better on a day like this, then they really have no ammunition.
Once again, I remain you to stay focused on the price action and don't let a bullish or bearish thesis blind you to what the market is actually doing. It is very easy to craft arguments for what should happen, but the market has a mind of its own and we have to pay attention to what it is saying. What is saying right now is that it isn't ready for any significant downside.
Have a great evening. I'll see you Thursday.