On Tuesday the market once again illustrated how resilient it can be. The action started very poorly for the Nasdaq after a surprising weak earnings report from Google (GOOGL) . The selling accelerated late in the morning as some large "sell" programs hit small-caps and technology names, but the buyers went to work in the afternoon and had the S&P 500 in positive territory by the close.
This was the setup for a better-than-expected earnings report from Apple (AAPL) . Market players have been caught leaning the wrong way a number of times recently and the Apple report is creating another such situation. Good news has caught people by surprise several times during earnings season, such as when Facebook (FB) reported, but the buying momentum has not been sustained -- although the indices are pushing to highs.
The big question now is how much positive momentum this Apple news can create. The bears are grumbling loudly about how extended the market has become and sentiment surveys indicate a high level of complacency, but it has been deadly to try to time a shift in market trend.
The chase of this positive open is complicated by the Federal Open Market Committee interest rate decision Wednesday afternoon at 2 p.m. ET. That is following by a press conference with Fed Chair, Jerome Powell.
The general consensus is that the Fed will leave rates unchanged, but the focus will be on whether the very strong GDP report from last week had any influence on the Fed's dovish stance. Much of the GDP growth was a function of a build up in inventory -- and there still are no signs of inflation, so it is very unlikely that the Fed will be making any major policy shifts.
It is expected that Powell will reiterate that the Fed remains data dependent and does not expect to make any moves in the near term. Although the Trump administration has been jawboning for rate cuts, the Fed is not likely to be influenced.
Overall, the trend remains positive. There is a positive catalyst from Apple and the potential for a reaction to the Fed depending on how Powell frames thing. We will also start hearing more about negative seasonality as earnings season comes to an end.
My biggest concern about the market isn't the trend, but the choppy and mixed action in many individual stocks. There is some good action, but it is narrower and there have been some sharp selloffs in places, as well. That is being covered up by big-cap strength, but my cash levels are rising as I find the stock picking challenging.