In a theme we've seen played out numerous times, the market shows its strength just when it looks like it is ready to break.
If you can remember when Brexit was first a 'thing' over 5 years ago. The S&P500 was gyrating around heading into a big vote. When the market closed the $SPY was at $202.. and later that evening rallied to $212... the next day the $SPY traded under $200 hitting a low around $192. From there the $SPY rallied past $212 and hit new all time record high after new all time record high.
It's as if it wanted to come down, give the illusion of possible weakness, before reversing and doing what it does best.... go up.
The market clearly got ahead of itself recently with the NASDAQ hitting new all time highs. Late last week the market fell over 5% in one session. That was a wake up call... hey the market isn't going to go up every single day.
We had the S&P500 on Friday give up all of its early gains and turn negative. Another.. see... this market isn't always going to go up... kind of statement.
And then we have yesterday. Futures were down sharply overnight with Dow Jones Industrial futures down nearly 1,000 pts.
The $SPY came down to support at $295 overnight....a little more than 24 hours later the $SPY has rallied $18.
I talked about the long term support test yesterday and how important it was that it held. Sure enough not only did support hold, but it acted as a spring board for the market.
The FEDs latest update on its corporate bond buying scheme helped put some fuel on the fire yesterday. The positive momentum continues today.
With the FED buying bonds the speculation is that the next progression in the asset inflation scheme will be buying stocks. Yep. And its really not much of a stretch anymore.
The Pandoras box is open. There is no turning back now.
As such stocks look poised to rally beyond their post Virus highs of early last week. The market does not see a big second wave that is being spun on the media. At least that is what the price action is saying.
I said it yesterday, even with futures near their lows.... that the stock market, buy the dip mentality, was still out there.
"The recent buy the dip mentality of this market, I don't think its gone just yet. And that is the hallmark of a market that wants higher prices. The proverbial drowning a beach ball action."
We are seeing money flow into stocks despite negative news... lets call it "Hertzing"
Yesterday $LK filed with the SEC a reporting delay for their financials. Normally a negative for a stock... today $LK is up over 10%. Today LK is "Hertzing".
What does that tell you? There is money out there looking to buy anything and everything. It's looking for what's moving and its moving it more.
While you may not agree with whats moving or how far its moving, its a sign that money continues to flow into the stock market. Which means higher prices lie ahead.