This market has a large amount of recent news to digest. We have not only the Fed rate cut, but some big earnings announcements, economic data and what happens next on the China deal. And there could be headlines on any number of issues soon.
This combination of news and recent technical strength suggests that we are in for some pullbacks and consolidation. It is highly unlikely that the market is going to suddenly collapse but it is necessary for shorter-term holders to flip and for stronger hands to start to accumulate for the market to go higher. That usually occurs on weakness rather than strength.
The important issue is to not read too much into some weakness right now. It is not only logical but healthy. The trick is to manage individual positions and make sure you stay disciplined with stops. Don't be sucked into making the big market direction calls in this environment.
Keep in mind also that while the majority of S&P 500 stocks have now reported, the small-cap earnings season is just starting. There will be plenty of interesting reports among the smaller names in the next couple weeks, which is always helpful for stock pickers.
I'll be hunting for some new buys as this consolidation takes place. I've reduced my position in Recro Pharma (REPH) , which I've been discussing lately, into strength. I'll be looking to remount on weakness as I believe there is further upside.