Twice this week the indices bounced strongly as fear of the Chinese coronavirus subsided. In both cases, many market players were confounded by the strength but the strong price action pushed them to believe that maybe the media had overblown the bad news.
Coronavirus concerns bubbled up again today but so far there is no rush to buy the dip. Many market players are still quite uncertain about how much of an economic impact there will be and how much of it will spillover from China into the rest of the world. Uncertainty of that sort is not market friendly and pushes money to the sidelines.
There are a couple of other issues at work today that are also causing selling pressure. The first is a very weak Chicago Purchase Managers Report with some of the lowest numbers in years. There may be some aberrations in the number due to the decline in production at Boeing (BA) but it is negative nonetheless.
The second issue today is that some of the big cap names that had great reports recently are seeing a delayed 'sell the news' response. Amazon (AMZN) is still up big after its great report but that stock was not nearly as technically extended as others.
Apple (AAPL) has totally given back its post-earnings report gains which is mostly a function of the stock being too extended. It was a great report but was well anticipated and there isn't much willingness to chase it higher. Microsoft (MSFT) and Alphabet (GOOGL) are also seeing selling pressure now. The semiconductor group (SMH) is also a good example of how a 'sell the news' reaction is now occurring.
The S&P 500 bounced off the lows it hit on Monday almost perfectly but that support is not strong and I'll be surprised if the market can recover without breaching it first.
There is a little bounce action at midday but as I keep saying, the key to the market is the action at the close. When we see late day selling we will know that the character of the market has undergone a change.