After a bout of selling into the close on Thursday the market looked grumpy and confused Friday morning. Despite some hints that maybe there might be some positive comments this weekend at the G-20 meeting about China trade, the market did not act at all optimistically about the potential for good news.
As the day progressed there were a few more hints that maybe some positives would develop this weekend during a meeting between Trump and Xi and the action improved in the last couple hours of trading. It was still pretty muted buying but the mood did improve.
The big question the market faces next week is whether it can build on the positive technical change that occurred following Fed Chair Jerome Powell's dovish comments. The market loved the news but turned a bit uncertain on Thursday and was hesitant again Friday.
It is understandable that there is some hesitancy to jump in front of the newsflow that will occur over the weekend as this market has not rewarded optimism. Good news has been consistently sold during the last couple months and no one really expects a major trade breakthrough this weekend.
Conditions are good for more upside into the end of the year but we are going to see some volatility on Monday no matter what happens this weekend. I'd likely be a buyer of weakness on Monday if the market reacts negatively.
I'm encouraged by the technical change that occurred this week and will be looking for some new long positions but most charts are still poor and upside momentum limited. I'm optimistic but still carrying a very high level of cash.
Have a great weekend. I'll see you on Monday.