Hope Springs Eternal

On “news” of a potentially beneficial therapeutic and the promise of reopening parts of the economy in the days ahead, the S&P futures have shot up above the 50-day moving average. We shouldn’t be surprised.

This, in fact, has been the way this recovery has worked from the very beginning. Every single moving average has been topped via a gap higher on something or another, with the biggest gap higher accomplishing the 10/20 cross on April 6.

It’s a gambit which has worked beautifully so far. While pundits debate which letter of the alphabet this rebound will most resemble, SPX has regained its 50% retracement in 13 sessions versus the 17 it took during the V-shaped recovery in Dec 2018-Jan 2019 – when the world wasn’t gripped by a pandemic and a stunning drop in GDP.

Unfortunately, that is our lot. And, as the futures start to slip coming up on the open, the gap higher method is going to fall a little short.

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