The Dow is 420 Friendly Nowadays

The early weakness in the small caps is now looking like a trap to lure in overzealous shorts with an itchy trigger finger, the indices quickly regrouped and are now surging into the heart of the afternoon session.

While I did not rush in and short this morning, I have been extra selective in terms of adding back long exposure. My reasoning there is that when we see the Dow move in 400-500 point swings, or more, it tends to be much much characteristic of an ongoing correction than it is a smooth uptrend. 

Nonetheless, the fact remains that bulls have been uniquely resilient for a good while now, and as tenuous as the market has felt of late the burden is still on the bears to disprove the constant V-shaped rallies we have seen off dips for years on end. 

Interestingly, a recent momentum and earnings winner like NVDA is red and lagging the market today. However, bulls are finding plenty of other ammunition, in terms of many charts and sectors trying to bounce off respective 200-day moving averages. 

I still plan on keeping my trading portfolio net exposure light, overall, until we see a more days of charts firming up and some more follow-through higher. 

But this morning's initial wekaness serves as a reminder that shorts can get hurt badly, too, even in corrective markets given the violent price swings and abrupt reversals we see when the VIX hovers above 20, as it is now.