Despite less favorable news flow and overbought technical conditions the indices continued to hold up well early on. Poor action in retailers was being ignored and the government shutdown drama wasn't having a significant impact.
It is likely that the market is now taking some comfort from the sanguine and dovish sounding Fed Chairman, Jerome Powell, who is giving an interview at the The Economic Club of Washington, D.C. He isn't saying anything new and it is pretty clear what the Fed's policy now but the issue of "sell the news" may come into play.
The market is reversing now after some dovish comments as Powell talks about being worried about the level of U.S. debt. This isn't anything new but this is a market that is prone to find an issue to use to justify some selling.
This market is in position for a pullback and it is going to find some easy excuses to do so at some point. It may be China, the government shutdown, Jerome Powell, the economy or any number of things but as soon as the market drops we are going to see all sort of easy explanations.
It looks like Powell is triggering a "sell the news" response now but the dip buyers have been stubborn lately. I expect the sellers to become more aggressive only if we are weak in the last hour of trading today. If we close in the bottom half of the range I expect to add to index shorts.