U.S. Stocks Want To Bounce, But Not So Sure About A Rally

Bounce, yes. Rally, maybe.

What the difference? Conviction and duration.

The wider market isn’t sure that the bad news on the U.S. China trade war is over and doesn’t want to get blind-sided. That’s why the broad indexes such as the Standard & Poor’s 500 and the Dow Jones Industrial Average were up only modestly today, gaining 0.54% and 0.64%, respectively, at the close. Big export-oriented components of the Dow such as Boeing (BA) and Caterpillar (CAT) were up only 1.52% and 1.74%. I say only because these stocks were hit so hard during the trade-fears selling.

On the other hand, traders are willing to make bounce bets on stocks that might show big short-term moves–even if they’re not convinced the moves will last very long. Among the bounce stocks that I’ve highlighted recently today Twilio (TWLO) was up 4.28% today; Autodesk (ADSKWealth Strength IndexAAPL is Extremely Up and trending Up) closed up 2.93%; Salesforce (CRM) added 2.41%; and Freeport McMoran Copper & Gold (FCX) climbed 2.88% Even the volatile China stocks that I flagged as good bounce plays, bounced today. Ctrip.com  International, for example, gained 2.07%. A volatile and beaten up sector such as biotechs showed one of the biggest bounces on the day with Sangamo (SGMO) ahead 4.43%, Ionis (IONS) gaining 4.11%, and Incyte (INCYWealth Strength IndexAAPL is Extremely Up and trending Up) climbing 3.16%. (By the way, to see my two Special Reports on stocks for the bounce, you’ll have to subscribe to my JubakAM.com site. I sent out a special offer with a 20% off on Monday and a repeat of that will go out on Monday of next week in case you’ve misplaced the first email.)

How long does this last? I think traders will ride this market higher–looking for an end of the year bounce–as long as the news flow lets them. On the side of the bounce: the Fed’s meeting on December 19, which is expected to show a slowing of the schedule of interest rate increases in 2019.

It’s always wise to remember, however, the adage of old, battered, market savvy traders: The market will act to embarrass the most people that it can as often as it can.