Despite All the Hubbub, Market Ends Week Where It Started

It was an eventful week for the market, with a variety of news events. But after a couple of dips and a couple of rallies, the indices ended up little changed. The small-caps lagged and there was softness under the surface, but not enough to change the overall picture of an uptrend under pressure.

On Wednesday, there was a better-than-expected ADP jobs report, but on Friday the nonfarms payroll report was much weaker than expected. The weather was blamed for the bad report but ignored as far as the good report.

In addition to jobs, we had a new worry come to the surface as the Fed started discussing what it was going to do about its balance sheet of $4.5 trillion, according to the minutes of its last meeting. This spooked the market on Wednesday afternoon but, as is typical, the downside momentum never developed. The weaker-than-expected jobs news probably tempered some of the worries about the Fed being overly aggressive in cutting its balance sheet.

There was also some political news as President Trump authorized bombing of a Syrian airbase, but after a brief dip overnight the market didn't pay much attention. Recent concerns about the pace of tax reform and other fiscal matters didn't have much impact this week.

While there is plenty of news, it doesn't seem to stir up much emotion. The dips were quickly bought and the spikes were quickly sold, which left things flat. That is great for day trading but doesn't offer much for trend followers or position traders.

The underlying weakness in small-caps is a problem but the S&P 500 is riding the 50-day simple moving average and doing what it needs to in order to stay technically healthy. The bears have plenty of good arguments again, but the price action refuses to confirm the pessimism.

Earnings season is coming up soon and there will continue to be plenty of headlines out of Washington, but the best approach isn't to anticipate but to stay vigilant and watch for a shift in the character of the market action.

Have a great weekend. I'll see you Monday.

At the time of publication, Rev Shark had no positions in the stocks mentioned.