Rally likely gains steam after 4/2, but still underway despite the skeptics

Near-term Equity index trends remain bullish despite Wednesday’s pullback and will likely push higher into the end of the month and quarter. Despite some investors expressing skepticism about this rally being just a “Dead-Cat Bounce,” there are ample technical signs that this move should be underway despite the recent sluggishness. Both Treasuries and the US Dollar have slowed their rate of descent, but intermediate-term trends in both remain bearish. Following some whip-saw-like trading into next Wednesday (4/2), I expect Equities to start to turn higher more quickly.

Wednesday’s weakness failed to derail the ongoing bullish bounce from 3/13. While prices in $SPY and $QQQ fell to nearly fill the gap from last week, there wasn’t meaningful technical damage to say this bounce had run its course. 

As discussed in recent days, the combination of bearish sentiment with bullish breadth initially in mid-March was helpful towards forming a meaningful low. While many remain skeptical ahead of 4/2, it looks right to stay bullish with the likely Pension rebalance into end of month and quarter which might total $40 billion or more.

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