Is the latest run in the equities market missing the plot?


Stocks are off to solid gains to start the week. You can attribute it to better coronavirus developments globally or perhaps the supposed secret among Wall Street players in trading yesterday or even FOMO investors thinking that the worst is behind us.

But you can't really deny the bounce that we are seeing in the market over the past two days, especially when you draw up the chart and look at the technical levels.

In Europe, the DAX is now trading up by ~28% from the lows posted last month:


The CAC 40 index is up by ~24% from its lows for the year, with the FTSE 100 also up by ~18% from similar lows as well.

In the US, the S&P 500 index closed yesterday with 7% gains and that is more than 21% higher than the lows posted back on 23 March, with futures pointing towards more gains so far in trading today at least.

Notably, price is working its way back above the 38.2 retracement level of the swing lower - a level which has limited the upside rebound over the past week or so:


Technically speaking, there is quite a bit of optimism in the recent rally in the equities market as investors look to try and turn the bear into a bull. But again, one must always remember that the strongest of rallies tend to come in bear markets.

It is hard to argue with the technical levels amid the current sentiment in the market, which can so easily change from day to day or even hour to hour.

I'd argue that only at the end of the week, will there be a better tell for how we may be going to proceed moving forward on this risk rally and budding optimism.

The 200-week moving average in the S&P 500 at 2,648.28 is going to be key in that regard.