Strong markets tend to overcome bad news quite quickly and that is what is occurring this morning. The market is already moving on from President Trump's surprise tweet that he is canceling stimulus discussions until after the election.
There are several reasons for the market's optimism. First is that it is a near certainty that stimulus will eventually be done. Both parties want it and the Fed is pushing for it. The only issue is what form it takes and what other provisions will be included. Those issues will eventually be resolved by the election.
A second positive is that President Trump has proposed a stand-alone bill for stimulus checks for $1200. So there still are negotiations taking place in some form although it is likely that this will be rejected.
The move by Trump to cancel the stimulus negotiations puzzled many market participants but now there is reporting that it had more to do with Senate Republicans that would not have passed a bill even if Trump had approved of it. That sounds likely and shows that this is still a very fluid situation.
For now, the market is willing to shrug this off and go back to work. The technical action has been quite strong lately and the speculation in small caps has been particularly robust. That strong action is a function of liquidity and the general view that many stocks are not extended or expensive. There should be strong underlying support. Many dip buyers are likely disappointed that there isn't a gap-down open this morning that would allow them to put more capital to work.
From a trading standpoint, the most important issue right now is finding the sectors and themes that are working. The SPAC group has lost its luster but there is a strong interest in battery plays and some select biotechnology names. Breadth was very strong for most of the day yesterday and many areas of the market are working even though the FATMAAN stocks have turned into laggards
I'll be looking to put capital to work in good chart setups and in names that I believe will have solid third-quarter earnings in a couple of weeks. There continues to be very bullish action and even a flurry of tweets can't seem to stop it.