A bounce of over 1,000 points in the Dow Jones industrial average would normally be viewed as a tremendous move, but when the same index lost nearly 3,000 points the prior day, it isn't that impressive. It was a relief for many market players to see positive action, but it could have been much better.
Breadth was two-to-one positive, which isn't close to the inverse of the prior day. There were still over 2,700 stocks hitting new 12-month lows and the Russell 2000 Small Cap Index (IWM) lagged for most of the day. That isn't terrible, but when the federal government is throwing trillions of dollars at the economy in fiscal stimulus, it is disappointing that there is not a rampage of buying.
I repeat, there is no big mystery why the response is not better. The coronavirus situation is still a substantial unknown. There is a battle between stimulus and the coronavirus and the coronavirus is going to prevent a better response, because of the uncertainty.
If a stimulus-induced bounce does take shape now, the potential that it will fail is quite high. The market will still have to grapple with virus headlines and a shutdown of the economy for weeks before there will be good data to evaluate. Health professions just don't know if they will succeed in "flattening the curve" or not.
If you are a long-term investor looking to build positions, then you should stay patient and ignore all those "professionals" urging you to put your precious capital to work when risk still is running at high levels. The key to good investing isn't to buy a stock that has gone down a lot. The key is to buy when risk is low and the potential for sustained upside is high. That is not the current situation. If you want to do something then, day trade the indexes rather than buying stocks that are in a bear market.
Have a good evening. I'll see you tomorrow.