Except for those who are extremely long, many will be disappointed with this big gap up. I am sure those who were holding a lot of cash were hoping for a big down open to buy into. From the zerohedge article about institutional capitulation, it seems like most hedge funds are running higher than normal cash levels and have already reduced their beta exposure as of March 21, much lower than at any point this year. That was before the Thur-Fri Mar 22-23 1-2 punch of a selloff that crushed the SPX over 100 points.
This makes me more confident that the retest of the Feb 8 closing lows on SPX at 2580 should hold, and could spark a beta chase when the double bottom becomes more obvious. I am already fully loaded so there is nothing for me to do. If I was holding a lot of cash, I wouldn't chase this gap up and I would look to buy any intraday dips on the day. I am not going to daytrade it, so I will just hold my longs even though it should dip signficantly intraday off this big gap up.
One thing I have noticed on the selloff last week was the very limited protection that long Treasury bonds provided. That is a bit of a troubling sign for bond bulls, although I am still bullish on Treasuries, I think an equity rally in the coming weeks will probably cause 10 year yields to trade back towards the tops of its 6 week range, above 2.90%.
On the trade war, it sounds scary but as I have mentioned before, there is no way the corporations and the bought for politicians will let these tariffs get large enough to become meaningful. It will end up being another political show which effectively does nothing for American manufacturing and just ends up being neutered by corporate lobbyists. There is no bite in this populist dog when it tries to chew on US multinationals. They are the power center of US politics. They will win, as always.
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