Yesterday was a massive liquidation event. Leveraged strategies were being unwound, either voluntarily or involuntarily: margin calls and liquidation. The selling momentum created great angst pulling in many other investors that may not have needed to sell to liquidate. Corrections often end with just this type of action. No one really ever knows when a bottom happens, they are only obvious in retrospect. However, yesterday looked classic.
The Federal reserve is now pumping in more liquidity, fiscal stimulus is on the way and of course our health authorities are gradually making progress in dealing with this coronavirus outbreak. Confidence that we can get through this crisis is increasing.
Market recoveries, just like corrections, begin well before the facts on the ground are obvious. This one will be no different. We continue to see positive divergences between individual stock money flows and price action. Accumulation is clearly taking place by strong players. We will get through this, stay steady my friends.
The Lonely Bull