Just classic. Just your typical post long weekend monster gap up after chicken littles sell their equities on a down Friday because of the fear that global markets will crash. The put-call ratios were out of this world on Friday despite the market staying above last Tuesday's "scary" lows. We got all kinds of fear talk, fear of the Fed hiking rates in two weeks, fear of China re-opening their markets after their holiday. Fear of a new bear market.
The fear itself is a greater depressant of stock prices than the actual cause of the fear. You had China basically flat over the past two trading sessions, Japan was quite weak, yet you have S&P futures up huge. The only thing really supporting this huge surge higher is Europe, and that's not necessarily a good thing for US equities because it is based on a weak euro/strong dollar.
You have to have a long bias for the next several days. As long as the markets are volatile, the Fed has your back. It has been a proven winning formula for almost 30 years. I would be shocked if they raised rates in September. Absolutely stunned. Since Greenspan ignited the Fed put, anytime you have a weak stock market, the Fed will do whatever it takes to soothe the market. It doesn't always work over the long term, but over the short term, it works a high percentage of the time. I will make that bullish bet again on the Fed, and history is on my side.
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