Market Ignores 'Black Swan' Shadow Overhead

The market continues to be very unconcerned about the coronavirus. The methodology used for determining coronavirus cases in China resulted in sharply higher numbers overnight and the CEO of Alibaba (BABA) said that it was a "black swan" event that would have meaningful economic impact, yet buyers jumped on early weakness and were able to push the indexes into positive territory for a while.

The indexes softened late day, and breadth finished negative with about 3,400 gainers to 4,000 decliners, but it was a mild response to what could have been a very good excuse for an extended market to correct.

So far in 2020, the market has been up on Friday only once, so it is likely that market players will be looking for more selling pressure Friday. In addition, it is a three-day weekend, as the market is closed for President's Day, which may be a catalyst for some folks to move to the sidelines.

One of the main reasons this market isn't pulling back much is that a pullback is so anticipated. When a pullback does develop, there is an automatic tendency to buy the dip and that catches the overly anticipatory top callers by surprise. This has played out repeatedly recently. At some point, the pattern will change and the character of the market will shift. It is likely that there will be a number of market players looking for some signs of this on Friday.

There are some positive responses to earnings tonight such as Nvidia (NVDA) and GoDaddy (GDDY) , but there has a been a tendency to sell into those gaps as we saw Thursday with Tempur Sealy (TPX) .

This is still a market that refuses to rest very much. The smart play continues to be to stick with the trend but we have to stay extra vigilant and watch for a shift in the action.

Have a good evening. I'll see you tomorrow.

At the time of publication, DePorre was long TPX.