There are a variety of explanations for strength in the indices this morning but the main catalyst is that market players just don't want to embrace a negative narrative. This has been the case for quite a while and even the coronavirus issue has failed to product sustained pressure and meaningful technical problems.
Political developments are being given some of the credit for the strength as Trump's odds of reelection have gone up after the messy Iowa caucus. But what is really at work is that market players are once again afraid of missing out on the upside. The crazy parabolic action in Tesla (TSLA) is helping the bullish sentiment to some degree as it makes it clear that there is still some very aggressive speculation taking place. This is not a market acting like it is fearful of a sudden collapse.
I'm looking for some new buys this morning and am finding it difficult. Two names on my screens are Asian gaming plays. Sea (SE) and Bilibili (BILI) are both hovering around highs as they benefit from the millions that are staying indoors due to the coronavirus.
I don't see any reason to focus on trying to fade the index strength at this time. As we know very well, these bounces tend to last long enough to convince many market players that the worst is over. Once trust is regained then we can start looking for signs that a reversal may occur.
Right now the opportunities are on the long side in individual stocks so that is what I'm focused on.