It's a back and forth tug of war between investors in this tradin... by Rick Meckler

It's a back and forth tug of war between investors in this trading range.

Rick Meckler

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Categorized in : Company News

If we can resolve the China trade issue and have a reasonably good resolution to the Brexit issue with the UK, it adds a sense of optimism to the market. Combine that with the earnings today being good and happy days are here again.

This type of reaction we see almost every time from the Fed decisions, the first move is from the people who think it's not enough, and at the end of the day people conclude that they did exactly what investors expected them to do. Those people who got what they expected used the selloff to buy, and I think that's what happened here.

When you get a story like Walmart, you see the glass is half full because maybe it's not as bad as it seems. There are still companies succeeding in this environment, and that's going to cause the market to go back and forth.

As volatility has picked up, you've gotten more interest on the part of traders, and that in turn has led to even higher volume, when you get moves like this and reversals, it brings a lot of high-frequency traders in and short-term traders.

Until we get that G20 meeting and start to get some feedback from the (Trump) administration, it's going to be tough to go higher.

It's really about the administration continuing to hint a trade agreement is near, people don't want to miss out on the expected rally from that news.

There's a lot of momentum buying, and with the thought that new highs are likely, there is continued optimism, the one thing about this market and its long rally is as it's done well, it's dragged more believers into it, and it's sort of self-fulfilling.

So much is dependent on what we do with the trade situation with China. The real issue will be the global economy, and in particular, trade with China.

With the market up as much as it is, I don't think investors are in a rush to commit a lot of new capital unless they see events that would cause them to think we have another leg up ahead.

These companies would be revalued if, for whatever reason, their earnings or revenue growth really began to wane. But right now, it's not the case, they have the kind of top-line growth that is the envy of the rest of the companies in the S&P 500.

There's only a small group of investors who actually target their investing to the Dow Jones Industrial Average, all in all, I don't think it's meaningful to investors.

It was at one time perhaps one of the quintessential U.S. companies, and like others that have been taken out of the Dow, it's a reflection that they're no longer seen in that light.

The Fed rate increases, the ECB's decision to end its bond buying program, it suggests higher rates down the road, for the most part it's a positive because they feel the economy is strong enough to handle that.

Rising oil prices are really helping a part of the market that's lagged dramatically, but there's no question that it's going to become part of story in the fear that people have for companies that have input prices to be concerned with and also for inflation.

The market has stayed in this range for a while, maybe this is the higher end of it, interest rate movement makes people nervous and when it stops rising, people kind of migrate back to stocks. It is still at a point where it represents a more attractive alternative than bonds.

The wind was at the backs of these companies for a long time. Now it's sort of turned. Input costs are up for most people, how are companies able to handle that, and what are they able to do to offset it? Those are the kinds of things investors will look at.

There continues to be some concern over interest rates and their potential impact on equities. There's also been a little bit of a lack of momentum in this earnings period, it's not that earnings weren't good enough but company forecasts often weren't strong enough to make the market continue to rise.

To the extent you can get cash deals done, it provides a lot of support for the market, it takes out equities, where holders are likely to reinvest in other stocks, and helps re-establish that the prices that stocks are trading at are not too high.

The biggest motivating thing in today's market, and it's certainly thin trading, is the Amazon Prime day, which has gotten people interested in Amazon again.

Every fearful drop in the global stock market has been met by this lack of alternatives and cheap cost of financing... It's a 'risk on' when the world's central banks have your back.