Market players were uncertain whether they wanted to chase the market higher following a gap-up open on news of progress on the Hong Kong discord. After drifting around for a few hours, buyers grew bored and helped to create a little "don't short a dull" market action. The indexes closed the day at the highs on breadth of 5,600 gainers to just 1,700 decliners.
The SPDR S&P 500 exchange-traded fund trust (SPY) closed the day almost exactly at its 50-day simple moving average of $293.97. But all the other major indexes remained below there key resistance levels.
The mood of the market has made for difficult trading. In the last 48 hours, we have swung from despair to indifference and then hope. There isn't any strong emotional reaction to this market and that helps to keep the action pinned in a trading range.
The trading range of the indexes has become so obvious to so many market players that there is a greater likelihood that a breakout in either direction will be a trap. Everyone sees the upside breakout in the S&P 500 over 2944, which helps to create a "sell the news" dynamic when it does fall.
We typically think of sell the news in terms of fundamentals, but it also applies to very obvious technical levels at times. It tends to happen more often when the indexes undercut an obvious support level, and then reverse back up but the levels to the upside are so glaringly obvious we need to be cognizant of this possibility.
The big danger for the bears is that there isn't any obvious news flow to accelerate their negative narrative. With the Fed coming up in about two weeks, there is going to be many market players contemplating the old adage "don't fight the Fed." Of course, there is always the chance of a headline on China trade to shake things up, as well.
It is still a trading range action, but the bulls are threatening to make an upside move. Given the level of negativity lately, the potential for some squeeze action is pretty good.
Have a good evening. I'll see you tomorrow.