Tuesday’s market meltdown was an ‘overreaction’. Here’s why the rally can continue.

The Valentine’s Day massacre came a day early — was it a big overreaction? Stock futures indicate bargain hunters are on the prowl this morning, a little bit.

“What we’ve seen is a market caught offside with limited hedges in place and a max long position in risk,” explains Chris Weston, head of research at Pepperstone. “It’s worth pointing out that sell-offs like this have been incredibly frustrating for those short risk, as there has been limited follow-through.” Also, the Fed’s preferred PCE inflation numbers are still…