All week long market participants anticipated news about positive progress on U.S.-China trade negotiations. It kept a bid under the market every day, even though the bears were growling about slowing economic growth and extended technical conditions.
Finally, Friday afternoon President Trump announced some progress in the negotiations but it was far short of a final agreement. Both Trump and Chinese President Xi stated they think a deal is more likely than not, but it is all still very vague.
The news caused a brief "sell the news" reaction, although that was shrugged off in a matter of minutes and the buying accelerated again in the last hour of trading. Breadth was very good with over 5,400 gainers to 1,800 decliners. We are also seeing an acceleration in stocks that are hitting new 12-month highs with more than 300 now on the list.
The Nasdaq is now up nine weeks in a row and is showing impressive momentum. But what was most notable this week was the excellent stock-picking. Individual stocks greatly outperformed the indices and offered some great opportunities for chartists and speculative traders.
The good stock-picking is largely a function of underinvested bulls trying to put capital to work in stocks that may not be as extended as the indices. The SPDR S&P 500 ETF (SPY) is a much harder chart to buy than something such as Nio Inc. (NIO) , which moved up 7% Friday.
With the China trade news still mostly unresolved it can continue to serve as a positive catalyst. There is no doubt that this dynamic is driving the bears crazy but there really is no choice but to keep playing the same game as long as these negotiations continue.
Have a great weekend. I'll see you on Monday.