The indices continue to trend steadily higher on breadth that is approaching 10 to 1 positive as market players anticipate a massive fiscal stimulus bill.
Senator Chuck Schumer has commented that there will be full salary at four months while at the same time President Trump and others are hoping to have some people back to work in two weeks. What actually occurs is still uncertain, but the market is celebrating that things are moving in the right direction.
The market is still highly emotional and it is very unlikely that this bear market is going to come to a quick end like this. There is going to be a long process of sorting out the damage and it is unlikely we have even seen the peak of the coronavirus crisis.
The big positive of the massive countertrend bounce Tuesday isn't the gains that are occurring. It is that we are a step further in working through the bear market. We now have a key support area at Monday's lows and we will have some overhead resistance develop as Tuesday's action is consolidated or peaks out.
The good news is that as the volatility slows, it will be possible to employ some better strategies than just hoping we aren't shaken out by some tremendous swings. This action Tuesday is a necessary ingredient of a better market. However, it is not a signal that the selling has come to an end.
At this point, I start becoming much more serious about my shopping list and building positions. The parameters for risk control are better and that means if you make a mistake with your buying you can control the losses better. While there are huge gaps and 1,000-point moves on a daily basis, it is much harder to do anything substantive without taking huge risks.
We'll see what the reaction is when the final fiscal stimulus bill is announced. This is setting up for a "sell the news" reaction but there are a lot of folks hoping for a V-shaped move and will be hesitant to give up.
This is a market crisis unlike any other that we've seen and news about the coronavirus can change things very fast. Plenty of good opportunities lie ahead.