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 (ADSK) 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 (INCY) 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.
