In poor markets, bears often comment that "risk happens fast." It is just a shorthand way of saying that market conditions can change abruptly, and it happens to the upside as well.
We had a perfect example of how reward can happen quickly, too. The major indexes ended last week with a barrage of selling, and it would not have taken much for momentum to build to the downside.
Instead of more selling to start the new week, bonds bounced strongly, and that set the stage for equities to follow. When the gap-up opening was not sold, and there was a series of higher highs, the fear of missing out grew most of the day. There was a little profiting taking into the close, but by the end of the day, it was the best day for the indexes so far in 2021, and there were over five gainers for each decliner.
The pessimists will point out that volume was light, but that was more than offset by the very positive price action. The only sector that was weak was precious metals, but bitcoin and bitcoin-related stocks came roaring back.
If recent history is a guide, this bounce will persist, and we will see some "V"-shaped action. Action this strong requires some chasing if you want to put capital to work, and many folks will resist doing that, but eventually give in when there are no buying dips.
If you had a hard time putting cash to work, you aren't alone, but that also increases the likelihood that it will continue to be difficult tomorrow.
This was an impressive bounce today, and the likelihood that recent highs will be tested again very soon increased greatly. I'll be looking for more places to put some cash.
Have a good evening. I'll see you tomorrow.
