Stocks unwound some of the reversal of the last two days Wednesday, but it was not a significant move -- although the Nasdaq 100 ETF (QQQ) did manage a decent-looking 2% move. The FATMAAN names looked better after two days of selling but the phrase "dead cat bounce" comes to mind.
While there were more headlines about growth in Covid cases and hospitalizations that are leading to limitations on social activity in various states, the market continues not to show much concern about the issue. There is likely some anticipation of both economic stimulus and an effective vaccine that is preventing more selling pressure.
Breadth was around even for most of the day and the number of new 12-month highs remained suppressed. That illustrates a market that is in a transitional phase and has yet to make up its mind as to what it will do next.
The good news is that this sort of action is beneficial for chart development and there were some solid day-trading opportunities produced by the intraday volatility in individual stocks. The longer that stocks can consolidate in a narrower range the better it will be for strength into the end of the year. Seasonality is our friend at this point and there should not be a great amount of tax-loss selling with the indices back near highs.
I'm having technical problems today and have not been able to do much but I'm maintaining about a 50% cash position right now and am in no rush to make major buys right now.
This is not a "bad" market but the action is chaotic and needs some time to develop further. Stay patient and try to pick off a few select opportunities when you can.
Have a good evening. I'll see you Thursday.