Buying capitulation to S&P 3000?

In my last post I mentioned how the market could continue to ignore bad news and embrace hope and that's what has been happening. Friday's move was at least partially based on a potential effective treatment of COVID-19 based on a drug called Remdesiver. It didn't matter that it's nothing definitive yet, any type of postiive news relating to COVID-19 like this is being embraced at the moment. Trump announced a 3 phase plan to get the economy open again as well.

You can argue with the market all you want, cuss at the Fed or what have you, and it's going to get you nowhere.  With all the economic devastation going on why isn't the market going down like it should be right? That there appears to be problem - the cat's out of the bag already and investors/traders have made a big rush to cash and shorts/hedges in anticipation of bad numbers. The market is a discounting mechanism and it's already priced in bad news - that's what some people are saying, but to me it's more a function of Mr. Market doing what he does best which is to make fools out of as many men as possible.

What I'm seeing is a similar response to the rally coming out of the December 2018 low which is a relentless amount of put buying/shorting into strength. Initially there was FOMO buying as I had noted but it was able to sustain itself because it turned out that a lot of others looked at the initial rally off the low as an opportunity to make big bearish bets and now those bets have ended up going bust and the market has been climbing upon the broken backs of the bears yet again. Meanwhile, there's still a lot of sidelined money from the "pros" that is probably on the brink of buying capitulation. Look at for instance the NAAIM sentiment survey which shows that their members are still woefully under-invested at only 28% long.  AAII sentiment still showing more bears than bulls and the VIX at 38 is still quite elevated with plenty of room to unwind. I also read about a survey by BOA showing that global fund managers are holding historically high levels of cash and turned quite bearish near the lows.

All of the above on a stand alone basis is suggesting the rally has a lot of staying power. I know how crazy that sounds given the economic devastation. I also know that the rebound has been narrow  being primarily led by some of the big tech companies with some sectors like banks and small caps badly lagging (exacerbating the trend that's been in place prior to COVID) . Despite all this, you have to respect the action. If you've been short during this bounce you should be terrified how the market has been able to shrug off all this bad news and embrace any hint of good news. 

It seems clearer to me now that we are on the brink of buying capitulation which is leading up to the re-opening of the economy which means S&P 3000 is quite doable in the next month or 2. That sounds so ludicrous I know...but that's probably why it can happen!  But it wouldn't be wise to chase strength at this very moment. Let's see if the market can consolidate a bit here to work off a ST overbought condition.