There is a rampage of buying to start the day as the indices bounce straight up for the third day. Momentum is strong and breadth is running better than 2 to 1 positive. Positive responses to earnings from Walmart (WMT) and Cisco (CSCO) are helping sentiment and there is more confidence that the momentum stocks may see sustained upside.
For the last couple days, I've been discussing how the market strength has largely been a function of poor positioning. The folks that thought the breakdown on China trade would gain downside momentum were caught by surprise when the selling pressure did not continue.
Now we have morphed to the situation where buyers are thinking 'if no one else cares about trade wars, then I better start putting more cash to work'. It is a form of the 'fear of missing out' (FOMO) and it is in full bloom at the moment as the indices are going parabolic. The market is crushing the bears and causing buying panic among underinvested bulls.
The best move right now is to not try to fight this. A sharp intraday reversal would be a warning sign but there is no sign of that at this point. I'm struggling to try to put some cash to work and will maintain my buying discipline. I may not be able to keep up with this buying but I'm not going to fight it.