As is typical on options expiration day there was some chaotic action in the closing minutes, but overall, Friday was a dull day with a negative bias. Still, breadth was not bad with 3,400 gainers to 3,900 decliners and stocks bounced back nicely in the afternoon following a midday dip.
The biggest problem Friday was that a trio of stocks in the DJIA struggled. Boeing (BA) and Johnson & Johnson (JNJ) were the primary problem and American Express (AXP) added to the pressure with a negative response to its earnings report.
The indices have run for most of the week after a "sell the news" reaction following the China trade deal that never materialized. Good bank earnings helped to provide some upside and individual stock-picking improved nicely with small-caps leading. The action Friday looked like some routine profit-taking and repositioning as we head into big earnings news next week. No technical damage was done and a good trading range is developing.
In the week ahead there are a number of major reports which will give us our first real feel for the market mood. Of particularly interest will be Intel (INTC) , Amazon (AMZN) , and Microsoft (MSFT) .
I was encouraged this week by better action in individual stocks, which helps to provide some good setups heading into the various earnings reports. The potential for a test of the September highs looks good but the risk of headlines on China, the economy and the Fed will give the bears plenty of reason for pessimism.
There was a refreshing change in the character of the market this week and a pause Friday. It is a good foundation for more positive action next week.
Have a good evening. I'll see you on Monday.