In my opening column Friday morning, I discussed the likelihood of a V-shaped bounce and why they have become the norm in recent years. I didn't expect we would see one start Friday but the nature of these moves is to sneak up on market participants and then gain traction as repositioning and chasing take place.
The day started quite slowly with breadth around even but when the bears were incapable of generating any downside, the buyers went to work. They first jumped on their favorite FATMAAN names and then they started bottom-fishing some of the small-caps that have been slapped around this week. It was steady buying the rest of the day and was sufficient to put the Nasdaq 100 (QQQ) in positive territory for the week.
The bears have been growing very loud about the obstacles that lie ahead but this market never seems to embrace a negative narrative for long. While there is great concern that the presidential election will be so close that a winner won't be immediately named, the market doesn't seem to be too worried about that so far. Perhaps as the election nears it will become an issue but for now the main positives are window dressing and hopes of some sort of fiscal stimulus deal.
The inconsistency of the market this week made it very tough for traders. A week ago we were celebrating the great action in smaller-cap stocks as money rotated out of big-cap technology. That fell totally apart on Monday and gained traction on Wednesday before traders shook off the concerns on Friday.
We don't have great technical setups at this point. However, that is why those V-shaped bounces seem to gain steam as they catch so many folks by surprise. We'll see how much follow through we have into the end of the month window dressing next week.
Have a great weekend. I'll see you on Monday.