There continues to be some good excuses for the indices to pull back but they are holding up extremely well. Not only is there disagreement about the potential rollback of trade tariffs but the indices continue to be technical extended.
Quite a few pundits believe that sentiment is extreme enough to suggest a pullback is inevitable. Quantifiable Edges notes this morning that the S&P 500 (SPY) has gone 20 days without a single intraday dip below the 10 day moving average. This has not happened often but it has consistently resulted in at least a little downside in the near term.
It is likely that the buoyancy of the indices is due, at least in part, to the number of traders trying to anticipate a pause. Anyone that glances at a chart of the S&P 500 can't help but think maybe it needs some rest. The market is a very contrary beast and it takes great delight in doing the opposite of what seems extremely obvious.
Under the surface, the action is much more mixed. Breadth is slightly negative with about 3550 gainers to 3725 decliners. The number of new highs has declined to around 185 while new lows have expanded to 120. For a market that is this close to all-time highs that is a remarkably poor ratio of new highs to new lows.
There appears to be some bids in the biotechnology sector today but Apple (AAPL) is down and that offsets much of the positive action elsewhere.
Essentially the market is still digesting the recent gains and doing so in a fairly healthy way. The potential that this Phase One China Trade deal will get done soon is the main reason that the bears can not gain any traction.
I continue to find new buys extremely difficult. My "Stock of the Week", DocuSign (DOCU) , continues to act well and has support but, like many other individual stocks, it is not seeing any buying momentum. There just aren't any compelling reasons to put large amounts of capital at risk.
(Apple is a holding in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells AAPL? Learn more now.)
