Yesterday, we saw a big bounce or bullish reaction on the stocks market. We have to say, that that it could be expected because the market was really oversold. Important is how week candle close, not daily. I posted some analysis on server and many of them got to some important technical levels, so it could be reaction to strong supports.
Below are some interesting info about big retrace in S&P 500 history in last 10 years.
Wednesday jump was the result of Trump saying yesterday that shares present a “tremendous opportunity to buy” (so BTFD), or thanks to White House advisor Hassett’s assurance that Fed Chair Powell’s job is “100 percent safe”, or due to a major short squeeze of CTAs all of which had just turned short on US stocks, or the result of a massive $64 billion pension reallocation into stocks, or simply a bounce from massively oversold conditions, one which saw the RSI crash to 14 on Monday and the CNN Fear and Greed index plunge to a record low is probably irrelevant: what matters is that stocks exploded higher just as the S&P was poised to slide into its first bear market in a decade, according to Zerohedge.
We’ve had times when we dropped 20 percent and went into recession but this is an example, so far, where the market realizes a recession isn’t imminent, and going down 20 percent doesn’t make sense,” Chris Zaccarelli, chief investment officer at the Independent Advisor Alliance, told Bloomberg. “It’s somewhat telling that we didn’t cross it, we didn’t officially enter into a bear market.”
“This is not the kind of price action you see in normal bull markets,” said Robert Baird equity sales trader Michael Antonelli. “This is just a face ripping short cover rally. I am 100 percent not saying we are in a situation like 2008 now, but look at October 10, 2008 to October 13, 2008: the market rose nearly 12 percent in one day. October 27 to October 28, 2008, it rose 11 percent.”
Bear markets always serve up some very nasty rallies,” said Doug Ramsey, chief investment officer of Leuthold Weeden Capital Management, which manages about $1.2 billion. “There’s a saying that bear market rallies look better than the real thing so I’d expect at some point here a 3 to 4% up day. It’s not unusual at all to see that in a bear market.”
“This type of volatility primarily occurs in bear markets” said Fred Hickey, editor of the High-Tech strategist. “The stock market was short-term oversold & due for a sharp rally. But a 1,086 point rally, while fun for the bulls, will scare some investors away. They’ll realize the current market is too dangerous for more risk-adverse investors.”
In fact, according to Bloomberg data, in eight previous bear markets the S&P 500 experienced rallies of greater than 2.5% more than 120 times as the benchmark plunged from peak to trough. From the collapse of Lehman to the financial crisis bottom in March 2009, the S&P 500 rallied more than 4 percent on 13 different occasions.
We will see how the market will develop this week and be aware. Important is weekly close candle. Below are some stocks/indices where market bounced from important areas.
S&P 500 EMA 200..