For the second time recently positive U.S.-China trade news led to a sharp intraday reversal. There was a delayed reaction this time, but the issue is that China-related trade news just doesn't have the same power that it once did.
This isn't too surprising in view of how often the market has spiked on meaningless trade headlines. However, it does raise a longer-term concern about what happens when a deal is finally made.
After filling the morning gap, the indices all managed to stay in positive territory, although they were well off the intraday highs. Breadth remained quite good with about 4,350 gainers to 2,850 decliners. That is solid, but the majority of stocks closed lower than they opened and that hurts sentiment.
While there is still the likelihood for more China trade headlines later this week, market players are going to be hesitant to trust them and will be more inclined to sell into strength when it occurs.
Overall, the indices remain in good shape technically. Wednesday's reversal actually helps alleviate some of the complacency that has developed of late. The market did well as it climbed a wall of worry. The problem now is the worries about the economy and China have dried up to a great degree and they no longer are providing the same sort of driving force they once did.
Lyft (LYFT) bounced today, but the Ruhnn Holding (RUHN) IPO was a disaster and the secondary offering by StoneCo Ltd. (STNE) did very poorly. If the market can't handle new issues better than this it is a very poor sign.
The tend remains upward overall and technical conditions are healthy. Still, there are a few signs of problems so don't get too comfortable with long positions.
Have a good evening. I'll see you Thursday.