For the third time in June, the indexes immediately bounced back after a sharp selloff. Selloffs on June 11, 19 and 24 were reversed on the next day after some slight hesitation to start the day. The gain Thursday was not huge, but a 1% rebound on breadth of 4,600 gainers to 2,700 decliners didn't do much to comfort bears that were thinking that they may finally see some downside momentum.
This morning I discussed why the bad news about Covid-19 can't kill this market rally. First is that we simply see no great desire by most folks to shut down this economy again. They want to reopen and will find ways to do it even as cases accelerate. Second, that is just too much cash sloshing around and looking for something to do.
Many of the folks buying the market right now really don't care about market timing. There are opportunists that are looking for movement and since they are having success, they keep looking for more buys. The fundamental and technical arguments simply don't matter when you are catching an 18% intraday bounce in Forum Merger II (FMCI) .
The problem for many market participants is that there just isn't any way to know when this will come to an end and the character of the action will shift. It could be Friday, or it could be weeks from now. These big selloffs aren't scaring the folks. On the contrary, it is making them more aggressive buyers.
It is an interesting market, because it is so different on various levels. The traders are happy, but the market timers are annoyed. My advice is to focus on what is working rather than arguing with the action.
Have a good evening. I'll see you tomorrow.