Regardless of whether you think the current bounce in US equities is sustainable, one thing that we’ve noticed since stocks bottomed and bounced in an impressive intraday move on February 11th, the current rally has some interesting characteristics. Below we note that the average intraday move from the start of the year through February 10th was a one-way trip to 2:00 PM lows, when a small rally set in to ease the pain for bulls. Since then, however, there’s been much more consistent buying. While the end of day rally is still in place with stocks finishing near their session highs on average, it’s done so on what has already been a consistent up-move from the open.
Whether we get a continued rise off of the lows is definitely an open question. But in addition to consistent intraday rallies, volatility has also been on the decline. As shown in the chart below, VIX is currently testing recent lows, edging below 20. That level has been a challenging one for the volatility index to hold so far in 2016, but if it can keep pressing lower, it will make gains in equities, all else equal, more likely.