Pre-market action is painting a clear picture: the buyers are firmly in control heading into the open. Anyone looking for a fade here is going to have a tough go of it.
The Tape Doesn't Lie
We're seeing strong follow-through from yesterday. The SPY is up nearly 3% from its open, and it's not some thin, speculative bounce. This looks like conviction.
- Breadth is solid: Out of the 23 mega-cap names I track, 17 are trading higher, with only 6 down. That's not a market being propped up by a few names; it's a broad move.
- VIXY is getting torched: The volatility play is down over 4% intraday. That tells you fear is washing out fast, and money is flowing back into risk assets.
- My call was spot on: The premarket prediction was for a 3.4% move, and we're damn close to that already. The models are confirming the strength.
Where the Crowd Gets It Wrong
Some traders are still trying to call this a dead cat bounce, looking for reasons to short. That's the mistake. When you have this kind of broad participation and a clear unwind of volatility, you don't fight it. You don't get cute and try to pick the top on a move that just started to stretch its legs.
The comfortable trade is to look for a pullback and then buy. The uncomfortable truth is that sometimes the market just runs, and waiting for 'the perfect entry' means you miss the move entirely. The easy part of this rally might be behind us, but the momentum is still very much alive.
What I'm Watching
I'm looking for this strength to hold up through the morning. A strong open that doesn't immediately roll over would be a bullish signal. Any dip that gets bought aggressively, especially on increased volume, tells me the conviction is real.
Conversely, the one thing that would flip me is if we see a significant reversal on heavy volume within the first hour of trading. If the early gains evaporate fast, that would signal distribution. But right now, that's not the setup. Right now, this looks like a market that wants to go higher. Don't let your bias blind you to the tape.