Dow - fade the rallye around 23800-24000

Where are we in the sell off? Phase 1 of heavy deleveraging is may be over, making way for the rebound (phase 2). Equity markets fell 35% in a very short period of time, hence a rebound is all but normal, and with big selloffs comes big rebounds. The recovery could stretch until month end as equity funds re-balance their portfolio for the end of the quarter. UBS research shows US active funds equity positioning is now 2.5 standard deviation below average, in line with the 2008-09 lows.

However a V shaped recovery is unlikely given the damage to the economy. The corona won’t just disappear overnight and a long-term process of basing and filling stretching over several weeks, maybe months will probably be needed before we can expect a more durable/stable recovery.

Ichomoku cloud and 50% retracement limits the potential upside. A retest of the lows are likely from there