I ended last week's pre-holiday missive with the following: "It is easy to say the bulls are due. Really due." And as if right on cue, stocks proceeded to bounce hard the following session with the Dow Jones Industrial Average enjoying its biggest one-day point gain in history: 1,086.25. Nice.
To be sure, the bounce was to be expected. The market was oversold - as in VERY oversold on - just about every metric. Sentiment was reaching "give up" levels. Technical support zones had been obliterated. Trend measures pointed straight down. Market models flashed sell signals across the board. Everybody was now a bear. And the VIX had finally exceeded the magical 30-mark. As such, once the White House assured everyone that Jay Powell's job was "safe," (and for the record, the Fed Chair can only be fired for "cause" - aka malfeasance) an explosive, sigh-of-relief / short-covering / it's-time-to-go-the-other-way rally began. It will suffice to say that Wednesday was a good day.
But then came the reversal early Thursday morning. In keeping with the current trend, traders wasted little time in returning to the sell button. If you will recall, prior to the big bounce, the game had been to sell into EVERY advance the indices offered - no matter how short or small. So, with the market sinking again, the goodness of Wednesday's algo-induced blast appeared to be at risk.
Well, until 2:30 pm eastern time, that is. At that point, the boys trained their computer toys on the buy side. Word was that some $60 billion in pension money needed to be invested. So, in the ensuing 90 minutes, the Dow surged 860 points. Yowza! Talk about a perfect example of computers chasing their tails.
It was at this point that the, "Is it over?" calls began. ...