Despite weak guidance from Target (TGT) that is a drag on the retail sector (RTH) and an EPS miss by Goldman Sachs (GS) , the indices spiked sharply higher out of the gate. Larry Kudlow is not only preaching the strength of Phase One of the China trade deal, but indicated that the Trump administration is looking at 'Tax Cuts 2.0' in the next several months.
The positive news flow keeps tripping up market participants that are looking for some pullback to relieve overbought conditions. The skeptics and under-invested bulls are continually trapped by the surprising strength. The S&P 500 has now surpassed yesterday's highs and is at a new all-time high.
The China trade agreement is scheduled to be signed sometime before noon eastern time. There are still many details that are unknown and that seems to be a positive more than a negative.
There is no question that traders will be pondering a 'sell the news' reaction once the agreement has been signed. Many traders have anticipated such a reason since the negotiations began many months ago but they have been continually tripped up.
The dilemma this market presents is that the 'sell the news' reaction is just too obvious. Everyone sees it and understands it but when it doesn't occur there is no choice but to reposition and wait for the strength to cool again.
I've feeling handcuffed here as far as adding new buys but I have no interest in trying to pursue shorts until there is some meaningful weakness. The weakness is bought so quickly and the upside follow-through is so strong that it just isn't possible to catch any downside movement.
Like many other traders, I'd like to see some weakness to create better entry points, but this market doesn't care what I want and doesn't respect logical thinking of that sort. The smart move is to not argue with the market beast.