Thursday's Market Minute: Risk-On?!

Stocks are extending their gains this morning after China's Ministry of Commerce said Thursday that the leaders of the U.S. and Chinese trade talks held a phone call in the morning and agreed to meet in early October for another round of negotiations. Bonds are falling with the inverse rates bouncing, while Gold is down as investors gain confidence and increase their “Risk-On” positions.

The S&P 500 is now only about 2.5% below all-time highs despite deteriorating economic data and slowing global growth. The recent resistance of $2,945 in the SPX will be broken today and may signal another attempt at all-time highs above $3,000 for the benchmark index. The optimism may be getting out of hand as the trade issues remain and global growth remains tepid at best. Volatility is pulling back this week and the closely watched CBOE VIX is under $17 again, which is reflective of the rally. The ADP jobs report reflected another strong month of gains coming in at 195k private sector positions added, which was better than the 140K expected.

Does the rally mean that we are “all clear” for another move higher for stocks, or is this a head fake that has been the norm over the last month? Time will tell, but the rally may provide another opportunity to pare down long positions and offset risk ahead of additional volatility expected this month.

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