Tuesday morning's positive news is generating a "sell the news" reaction so far. Not only were there some solid earnings reports, the debt ceiling issue has been settled, yet market players are aggressively selling into the gap-up open so far.
While the indices are still positive and breadth is running about 4,100 gainers to 2,600 decliners, it has been steady selling since the open. This is already causing negative sentiment and if the opening gap is filled it will create an ugly technical pattern as well.
Most of the recent market corrections have started with strong intraday reversals on positive or benign news. It has not been surprising bad news that has caused problems but the inclination to use strength to reposition that has led to problems.
I don't want to jump the gun and sound too negative. We still have plenty of important earnings to come and, of course, the focus will remain on the Fed until its meeting next week.
I've taken a few stops and am in no rush to make buys. I've been struggling with the lack of energy in this market and the underperformance by small-caps. We now have reversals and rotation to make it more challenging. Apple (AAPL) is still helping to hold things up but there are no major pockets of strength right now.
The selling into positive news is a good reason for increased caution but there still is no change in the overall market uptrend at this time.