Stocks were weak in the premarket session but spiked up at the opening bell before fading again. The main issue impacting the market this morning is the Covid crisis in China, but there are a number of economic reports and news events that are coming up that are likely to result in elevated volatility.
The market is doing a good job of ignoring the problems in China, but the pattern all year is that the market has been too optimistic about certain events and then has been hit hard.
The biggest potential catalyst coming up is a speech by Jerome Powell at the Brookings Institute on Wednesday at 1:30 pm ET.
Although Powell has been consistently hawkish, the market keeps hoping that Powell may say something market-friendly, but it just hasn't happened. The market has been down 3.3%, 1.7%, and 2.2% the last three times Powell has spoken.
What is even more worrisome about the Powell speech is that the indexes have rallied into substantial overhead resistance just as that event is about to occur. Even without the Powell catalyst, the technical setup is not very attractive.
Currently, the market action is mostly index driven. There is very little stock picking taking place. The bounce at the opening bell was all indexes and computer-driven. Breadth is running about 2 to 1 negative, and there are no strong pockets of buying. This is not a market for stock pickers.