Snapping Back in a Major Way

The deeply disappointing Thanksgiving week price action in equities seems like a distant memory this morning, as bulls pounced on the U.S./China trade war détente weekend headlines. 

That said, this morning's rally is not a full-blown bull party yet, per se.

As I write this, for example, small caps in the IWM are up less than a measly 0.2%. Of course, there are reasons why small caps stand to benefit much less from the détente than, say, a large multi-national corporation.

Still, I have been a seller so far this morning, taking some chips off the table with my winners while keeping a close eye on any laggards for good measure, too. 

On that note, it is always difficult to chase headline-driven, sizable Monday morning gaps higher, insofar as establishing new longs right here, right now--I am going to let the action play out a bit more today before doing so, at least.

In addition, the S&P is gapping up to an obvious level of prior resistance. 

On the SPY ETF daily chart, updated below, we can see that anything over $280 (roughly 2800 on the actual S&P 500 Index) has been stiff resistance throughout this correction. If bulls are to further their case for that classic year-end rally, then they simply must avoid the type of violent rejection they faced in both October and November at this level.

As for the intraday fade off the indices' opening highs, it may very well prove to be a healthy development in terms of keeping longs honest, but only if buyers show the resolve to step back in later today to give us a respective close in the upper half of today's range.