The market has been experiencing a relief rally in the past few days, with the Momentum indicator stabilizing after a three-day losing streak. This is the first time since September that we’ve seen such a performance, and it’s worth taking note of. Early activity was largely driven by ETF price action, which makes up 37% of the tape and is holding steady above the 27% year-to-date average. The covering bid from Hedge Funds is also notable, with their demand across our franchise ranks sitting in the 96th percentile.

However, it’s important to note that liquidity is low, with volumes running high and the top of the book being quite low at just $5 million. This lack of liquidity is contributing to the move higher, but it’s worth keeping an eye on as it could impact trading activity.

Our floor tilts slightly towards buying, with Hedge Funds being 10% better to buy and notable demand across Semis, Software, and Retail. Lone Stocks are also 1% better to buy, with Healthcare demand standing out in Pharma and Equipment. While LOs are using this market strength to continue selling Software and Semis, it’s worth noting that the overall sentiment is shifting towards buying.

While the market has experienced a relief rally, it’s important to keep an eye on liquidity and sentiment as we move forward. With Hedge Funds and Lone Stocks both tilting towards buying, now may be a good time to consider adding to your positions.