Stocks gapped up strongly to start the day on news of European stimulus and continued optimism about the reopening of the economy. Many market players were caught by surprise, but the anticipatory bears were hopeful that maybe the action was too hot to last and that it might trigger some profit-taking.
The bears were right -- for about 2½ hours.
The selling in leading stocks picked up steam with the FAANG names leading to the downside, but it was a vicious rotation into "value" names. Money flowed into financials and other stodgy names like General Electric (GE) .
The bears looked like they were in position to assert themselves, but, as is so often the case, they lost their mojo just when it looked like they might have the bulls on the ropes. The dip buyers started inching back in, fear of missing out heated up, and then the machines jumped in to finish the job with a close at the highs of the day. The bears were nothing more than fodder for a short squeeze at the closing bell.
Once again it is a good illustration of how it is not possible to use macro arguments to try to time this market. There are dozens of compelling reasons why this market should pull back just a little, but it doesn't matter. The positive sentiment created by reopening the economy combined with the trillions in stimulus is crushing any negative economic arguments. Valuations are just some theoretical concept that only matters to academia.
From a trading standpoint, it would be nice if there was some natural ebb and flow to the action, but we have no choice, but to trade what we are given and what we are given right now is a Pollyannaish market where there is no such thing as a negative and stocks never go down.
Have a good evening. I'll see you in the morning.