The indexes have regained their footing and are trending higher as we await the Senate vote on the stimulus bill Wednesday afternoon. The agreement on the deal is creating some optimism, which also seems to have created a bit more hope about the coronavirus issue. Although there isn't much data to make any judgments about what will happen with the coronavirus, the positive market action helps to create the impression that maybe things are improving.
It is likely there will be an emotional response to the action passage of the stimulus bill this afternoon. Typically there are computer algorithms programmed to trigger on the news even though it may not come as any great surprise. It is simply an event that serves as a trading catalyst so watch for volatility to pick up once the vote is done.
I continue to be a seller into the strength, but I'm also looking for some new buys. At this point, there are almost no charts that are set up as technical buys. There may be other reasons to buy various stocks right now, but it isn't because the daily charts are offering great setups. At a minimum, charts need some sort of trading range before they will start to look more attractive. Straight down and straight-up action is good for flipping, but it is not great for position trades.
One chart I do like right now is GSX Technology (GSX) . This is a China-based operator of an education platform that has seen a sharp increase in business due to the coronavirus. The company increased revenues 406% in the fourth quarter over the prior year and is likely to post another sharp increase in the first quarter. The chart is quite attractive with support at the 50-day simple moving average and some recent consolidation under the $42.50 area. I took a position Wednesday and will look to expand it.
This is the sort of setup that we will see quite a bit in a bull market, but this is a bear market and the much more common pattern is the "bottom fish." Those trades can be extremely profitable as those that jumped on Boeing (BA) are seeing this time, but it is a different sort of trading than in a typical bull market.