Investors are all in

First of all, really great news that the early clinical trial evidence is quite promising to suggest effective treatment for COVID19 virus with remdesivir. If this is further proved by a larger patient pool in the randomized clinical study setting, that will really save life and help people globally to fight against this deadly damn virus! Keep fingers crossed!!!

The market may have already anticipated this great news together with some other developments that are exciting the investors and traders. So much so that they are virtually all-in!😗 This is not what I'm guessing. See here:

"ETF Investors Are All-In on Stimulus with $17 Billion Stock Bet"...this is what was reported by Bloomberg early this week. More from the report:

In only seven trading days this month, equity ETFs took in more than $16.5 billion, according to data compiled by Bloomberg. The torrid pace puts inflows on track to exceed the monthly total of $42.5 billion in December, when stocks rallied during what ended up being the tail end of an 11-year bull market.  

What a couple of weeks can make to change the sentiment 180 degree! It seems rarely you hear anyone talking about low testing these days. People start to jump in eagerly whenever there is a selloff, a typical FOMO feature. This is exactly what we were seeing in Feb when the market was topping but it was difficult to argue with anyone that the market could have topped and we should look out for a potential plunge. Technically speaking, we have passed the first two major Fibonacci retracement levels: 38.2% and 50% and we are now approaching the third major retracement at 61.8%, which should be around 2930ish for S&P, a spit distance. If we have another wonder rally day like today, we will get there by Monday. But there is something deserving caution for getting too excitement. I'm not superstitious by any means but I do believe the market cycle theory and the market quite often rhymes in cycle. Here is one I just got from my friend, just too difficult to ignore:  

Remember the 90 year cycle I've highlighted recently? Print off these two charts and look at them side by side.

April 17, 1930 - the Dow Jones Industrial Average topped after retracing 50% of the decline from the 1929 crash...

April 17, 2020, exactly 90 years later, the Dow Jones Industrial Average has now retraced 50% of the decline from the February high...

Also look at what had happened following the 1929 50% retracement. Do I mean we must follow this pattern this time? Of course not. We may just see the market continue to shoot up higher from here and recover everything within weeks. It is not impossible but I think it is a wishful thinking. In my mind, this is still a bear market rally. And remember.... the the main purpose of a bear market rally is to punish the traders who got too aggressively short, and to coax the wounded bulls back into the market, and then to punish them as well. Has the recent wonder rally in the past 2-3 weeks achieved this objective? We'll see soon!😎