It is convenient to think of the market in terms of bulls and bears battling back and forth. What we have right now is a battle between big-picture, market-timing bears and short-term, stock-picking bulls.
These two groups are focused on totally different things -- and it is causing great consternation for bears that think it is ludicrous that the market is not seeing a negative reaction to the spiking number of Covid-19 cases.
The speculative trading can turn extremely quickly and when it does stop then we end up with a day like Wednesday where 90% of the volume was to the downside. However, these traders come back very fast and we end up with some bounce action like we are seeing Thursday when they start looking for opportunities. The bearish narrative is quickly forgotten and the big-picture shorts grow frustrated with the illogic of the action.
The key to dealing with this is to simply recognize what is going on rather than trying to push the market into the viewpoint that you might hold. It is traders versus market timers and the traders are winning Thursday. That doesn't mean that the timers won't win Friday so traders have to move fast.
The primary indicator to watch in this battle is breadth. Currently, breadth is running 4,100 gainers to 3,200 decliners. The stock pickers are at work. When breadth moves to 2 to 1 negative or worse then it's the bearish timers that are in control. Lately, the timers have not had any ability to generate momentum, which has been very good for dip buyers.
This is an entertaining battle and a lucrative one if you can navigate the movement from timing to trading. It requires very short time frames but there is opportunity for those who are extremely quick.