Looking on the Bright Side

Multi-day relief rallies which are unforgiving to stubborn shorts and quickly become jaw-droppingly fast in velocity to the upside are not the exception during powerful, bearish trends. Indeed, they are the rule as they can and do materialize at various times along the way just when the data and economic prognosis seem particularly grim. 

Thus, the current move in the market should not come as too much of a surprise. However, it is likely correct to avoid extrapolating the price action this week, heretofore, is concrete evidence of a major bottom forming. Instead, the market is simply taking a breather from pricing in awful scenarios to look at possible bright spots in the coming months. And that is why names like BA CCL NCLH PENN RCL have appreciated as much as they have--When a stock declines 60-90% in a matter of days, unless it is an illiquid, insolvent penny stock it is likely to have magnificent technical bounces along the way.

Again, none of this is evidence of a meaningful bottom at hand, at least yet, although that becomes more of a possibility if too many market players position for a retest of recent lows. 

One chart which is giving good context to this bounce is the QQQ, morphing into a large rising wedge on the hourly timeframe, updated below. In the context of the prior downtrend, this pattern is a potentially bearish setup if sellers can reassert themselves for a move back down towards $180. On the upside, bulls can try to negate the pattern with a break and hold above $190.