The good news according to Morgan Stanley is that a tame close-to-close return has kept systematic supply at bay, and the rebound in growth stocks helped stem the P/L drawdowns for both HFs and retail traders alike. The bad news according to the QDS trading gurus is that the afternoon rally was likely driven by short covering, and it is hard to draw a read from this into the future – i.e., not much has changed, and the market is still grappling with the concern of a growth shock while the Fed is likely on autopilot.

Below we excerpt from the full QDS notes which lays out several thoughts on the flows, what big reversals usually mean for the market going forward, what the market needs to rally beyond a bounce, and the retail and systematic positioning setup from here.