The indexes spent most of Wednesday trending higher following reports this morning from Bloomberg that Chinese negotiators were hoping for at least a limited deal. That attracted buyers for most of the day, but a few minutes before the close there was another headline saying that Beijing had lowered expectations for a deal after the U.S. had damaged goodwill by blacklisting 28 Chinese companies.
There is nothing much other than these trade headlines driving the market action, and it makes for a casino atmosphere. Traders are reduced to betting on whether the next headline will be positive or negative.
Many market players believe that there won't be any deal, but it is a tough bet to stick with when the indexes move so swiftly on positive platitudes. Those that are optimistic are faced with the same problem, as an announcement of a breakdown in talks would send the market diving in a matter of seconds.
We still have a couple more days of this action to contend with before there is any formal announcement, so be prepared for more random action.
Assuming that you don't want to place bets on random movement, the most productive thing you can do at this point is to try to identify some stocks of interest to consider when the market action clarifies next week. Earnings season is generally better for stock pickers and thankfully, it is coming up quickly.
What does this market do next? It all depends on the next China trade headline. Once the Chinese return home on Friday evening, we may be able to focus on fundamentals, technicals, and psychology once again.
Have a good evening. I'll see you Thursday.