The bears tried hard to attack the action Monday but had little success.
First, they questioned whether there really was a meaningful deal between President Trump and Chinese President Xi Jinping, but obviously there were some positives as a variety of stocks rallied and commodities such as soybeans lifted as well.
Second, the bears went after the price action and tried to claim that since we didn't see "gap and run" action then there may be something negative. Frankly, it would have been a surprise if we didn't have some selling into strength after the big gain last week.
The S&P 500 ended up closing in the middle of its intraday range as buyers inched back in after the morning selling. Breadth was very good at around 5,200 gainers to 2,100 decliners but new highs were about equal to new lows.
Oil-related stocks led to the upside, while banks struggled as the yield curve inverted. While small-caps also showed some relative weakness, this was probably due in part to the big jump in many small-cap stocks last week.
Most of the bearishness Monday seemed to stem from political bias. There is a faction of the market that does not want to admit that President Trump can do anything positive. This may be due to a pre-existing bearish bias but it comes across as being more about politics than the price action.
In my view, the price action is strong and suggests that more upside is on the way. We are a bit overbought but with a dovish Fed and the trade wars on hold the bears' big arguments have lost their impact.
I want to see better individual stock-picking develop and am looking for that to occur as some backing and filling occurs. The bulls have the edge now and are in good shape for more upside after some rest.
Have a good evening. I'll see you tomorrow.