It was the fifth day of gains for the indices but the momentum cooled with a close below the open for the S&P 500 for the first time during this run. Breadth didn't quite reach 2 to 1 positive and the number of new 12-month highs fell from very elevated levels on Friday.
There was some solid action out there but after the furious run over the post five days it is not surprising to see some profit-taking. While it was not a full-blown "sell the news" situation market players couldn't help but wonder what the next catalyst might be.
Bonds weakened, which reflected some doubts about whether the Fed is going to be as dovish as the market celebrated last week. Also there is unlikely to be any movement on China trade negotiations in the near term so it is unclear if there will be a news driver to keep things running.
Markets with momentum as strong as this one typically don't reverse and go straight back down. However, the longer things stall the more likely some incremental profit-taking will occur.
The good news is that the charts badly need some consolidation in order to build a foundation for another leg higher. A few days of choppiness will help to sort out some of the better names and, if the market is cooperative, there will be some interesting setups.
The weak finish Monday isn't a big surprise and it is offset by the fact that the indices stayed in the green. The bulls have the advantage but entry points for new buys remain very difficult.
Have a good evening. I'll see you Tuesday.