The V-shape bounce keeps rolling along and is gaining steam. This has been a dynamic that has occurred many times in recent years and is in part fueled by poorly positioned traders who are looking for retests or downside that doesn't materialize. FOMO (fear of missing out) grows quickly as those V-shaped moves continue, and there is a 'wall of worry' aspect to it also that keeps buyers inching in incrementally.
The S&P 500 is hitting the highs of the day and has totally recovered from the losses that occurred this past Monday. That is impressive, but what is more impressive is that retail traders are very aggressive in the small-cap area. Breadth is running at about 3 to 1 positive, and the pockets of momentum are fairly robust. There is quite a bit of strength in oil names, but this is a very broad move.
I've been adding to some of my fundamental favorites but still have a very large cash position that I have been waiting to deploy. I don't want to chase at this point, but this action should help to set the stage for some good trading into third-quarter earnings.
I suspect that the well-known negative seasonality is contributing to the poor positioning, but I'm not convinced we are totally out of the woods yet as we still have a couple more weeks of traditionally poor action.