MarketSurge powers the charts in this video.
The US indexes just had their fastest V-shaped recovery in recorded history – it took only eleven days to go from being oversold under their 200-day moving average to a new all-time high. Granted, the correction wasn’t very deep, but the sheer velocity of sentiment change has been epic. There was a lot of bearishness and talk about stagflation two weeks ago. Now, we have a major FOMO (fear of missing out). There are many underinvested managers and traders, so every dip is likely to be bought aggressively. Obviously, this doesn’t mean that we won’t see shakeouts and sector rotations. The market never makes it obvious or easy.
Today’s market has become much faster. What used to play over months now happens in weeks. The collective access to more and timely information, to working strategies, has accelerated everything. We already saw the typical stages of a recovery. First AI infrastructure stocks (mostly fiber optics and semis) showed relative strength by staying near their all-time highs while the indexes were under their 200-day moving averages. They led the market higher. Then the bounce spread over more stocks – the lagging megacaps recovered at an impressive pace. Even the highly-shorted stocks with questionable fundamentals started to outperform, which typically happens later in a new rally.
The ceasefire end date is April 22nd. There is a possibility that if both sides don’t reach an agreement, we might see an escalation. Under such a scenario, oil prices will rally, and most equities will pull back. This is the dream scenario for everyone underinvested. If such a dip happens, it will be bought. The market has already shown politicians what will happen if there’s peace in the Middle East and what will happen if the negotiations fail. By doing it, it has essentially created or at least influenced its own future.
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