It is understandable that active traders are looking for some downside in the indexes. After the dramatic rotational action this week, the continued concern about a recession and the difficult trade negotiations with China, there are plenty of good arguments for some downside.
Unfortunately, the bears are running into two problems. First, there is more risk of positive headlines than negative ones. While the bears scoff at the idea that there is any real progress on trade and most dismiss the central bankers as ineffective, at best the market reaction to these things still leans toward the positive. The market simply isn't buying the negative spin that the bears seem to think it is obvious.
Second, the bears must confront the good technical conditions. The indexes broke out of a big trading range last week, and pushed nicely higher yesterday, mainly due to strength in Apple (AAPL) . Momentum has been tepid, but that has been offset by the high level of skepticism. There are a lot of folks who are holding their noses and buying. They aren't convinced that the market really is healthy, but they fear getting caught by positive headlines and getting left out.
There is a wall of worry out there that helps to keep the market positive. The bearish narrative is well known and even embraced, but when the price action doesn't cooperate, increment buying feeds on itself.
A Fed interest-rate decision is also coming up, and there is a near certainty of a quarter-point cut. It has not been a good idea to get in front of news like that, even when it is widely anticipated and already discounted to some extent.
The bears had a chance to fade the early strength, but a series of misleading headlines confused the action and now we are seeing some short squeeze instead. The bears are convinced that this action is not justified, but they constantly run into obstacles when they feel the time is right for some downside.