The "V"-shaped bounce is one of the most powerful forces in the stock market, and it was on full display Thursday.
Technically, the charts were set up well for a pullback and a possible retest of the lows hit on Monday, but the buyers refused to relent. They built on Wednesday's strength and the longer they pressed, the more it caused underinvested bulls to worry about being left behind.
The action improved steadily, but there was a small amount of profit-taking into the close. Nonetheless, breadth was solid at around three to one positive, and new 12-month highs picked up to around 200 names.
What was most notable about the action wasn't just the strength in the indexes, but that stock pickers were driving the action. This move was caused more by market players looking to find good charts and fundamentals rather than just chasing strength in the indexes.
We have quickly gone from oversold to overbuy, but momentum of this sort has a tendency to feed on itself. The worries about Evergrande (EGRNF) have been set aside, the Fed is on the sidelines for now, and market players are looking ahead to the end of negative seasonality. We had some corrective action, and that has given us a healthier market.
The market ran very hot Thursday, and it may be tough to keep running at this pace, but action of this sort creates underlying support. Those that missed out don't want to miss out the next time.
Have a good evening. I'll see you tomorrow.