Strong Apple (AAPL) earnings helped to produce some frothy action this morning but there is some selling into the strength and the indices are off the opening highs. Apple has extremely strong support but there is a general 'sell the news' attitude that seems to be hitting the broader market. The big question is whether the Fed announcement at 2 pm ET will be used as a further excuse for some selling into this strength.
The vast majority of the market was caught by surprise when the indices bounced back so quickly from the coronavirus scare. While many traders thought that the news reports were too sensationalistic and negative they still don't believe that the market would shift its view so quickly.
The feeling now is that the bounce has overshot to the upside and that has left many traders feeling out of synch with the action. What they would like to see is some downside in order to do the dip-buying they missed out.
The Fed is not likely to make any changes today in its interest rate policy but the market will be intently focused on what Jerome Powell has to say about the 'not QE' program that has created a half-trillion in liquidity. Many market players believe this is the main market driver lately and are very anxious to see how Powell addresses the issue.
The market is at a very challenging juncture right now as the strong momentum is overrunning worries about the coronavirus and hopes that there will be a healthy technical pullback. For many traders, the best thing the market could do right now is pull back but the price action refuses to cooperate and that is leaving them handcuffed.
I definitely would like to do more buying but I simply can't chase entry points higher right now. I'll keep looking for more entries but if you aren't chasing momentum there isn't much that is setup.