They say that the most vicious one-day/week rallies happen in bear markets, when the correlation between most stocks is close to 1.00, meaning macroeconomic factors and sentiment overrule individual catalysts. Today was a typical example.
There are currently 2611 stocks priced above $5.00 and trading at least 100k shares a day.
872 of them appreciated 5% or more today.
Only 11 of them reached new 20-day high.
Only 1 – new all-time high and this is $HANS, which is probably one of the best performing stock of all-time, being up almost 17,000% for the past 10 years.
Other stocks on the all-time high list include: $FIZZ, $CF, $UN, $MCD, $RGR and $ED. It is still pretty thin.
Rallies happen when there is an immediate catalyst or when there are expectations about an approaching catalyst. Did buyers show up today because the economic picture is so bad that it assumes another edition of QE? It is not really that relevant.
The market never moves in a straight line. The technical picture is still broken. It seems that every week there is a new set bad news coming from Europe, China or Washington. The market gaps down a couple percentage points and a few days later, everything is forgotten.
Any price recovery has to begin from somewhere. Today’s market action was a good start, but the overall price and mood trend is still down, which basically means that any gains on the long side should be considered guilty until proven otherwise. Trade accordingly.