Despite a lack of positive news, the indices started the week on a positive note. However, it didn't last long. The early gains were reversed within about an hour and that led to some lackluster churning before the selling picked up into the close.
It was the first time this year that the S&P 500 went from up 0.5% to finish down more than 0.5%. That sort of intraday reversal is a symptom of a sick market.
The late pressure may have been due in part to the semiannual rebalancing of MSCI indices at the close, but it is extremely difficult to measure the full impact that this has. Even without the rebalancing the indices are in very poor shape technically and are struggling to hold on to support. While the S&P 500 is still above the key 2800 level, the potential for more downside action in the indices is very high right now.
For a while the market was doing a fair job of shrugging off the negative news about trade but now the realization seems to be sinking in that there is not going to be any progress in the near term and it may be better to stand aside until conditions change.
The biggest positive the market has going for it right now is that there is no obvious positive. The friendly Fed is helpful but beyond that the bearish argument is so obvious and easy to make that you have to wonder if it already discounted to some degree.
The only way to deal with this market right now is to stay out of the way and let the selling play out. As we saw back in the fourth quarter of 2018 the downside momentum can be quite ugly once it builds and there really is no way to determine when it will end.
There is a big risk now that support levels will fall and you want to be holding plenty of cash if that occurs.
Have a good evening. I'll see you Wednesday.