Is the market rally sustainable?

With the recent news regarding a potential de-escalation, we're seeing a relief rally. Whether or not this rally is sustainable depends on how soon the de-escalation happens and the economic data going forward. However, there is some mixed messaging: 1) the 145% hasn't gone down yet 2) one side is saying there has been trade talks while the other side denies it. Also what happens after the 90-day pause? The current earning season may be "untainted" by tariffs, so results could be decent/good. But going forward, not so much. So there is still a lot of uncertainty. 

There are a few ways this could play out: 1) both sides de-escalate on their own without any talks, for example, by granting exemptions or simply reducing tariff level. 2) one side reaches out to the other to kickstart negotiations 3) no or little de-escalation. 4) Escalation before de-escalation again.  Scenario 1 may be likely since it is already happening.  Scenario 2 seems unlikely since one side promises to "fight til the end" and demands mutual respect and removal of tariffs, and so why would they negotiate when the other side is de-escalating on its own? Scenario 3 is the least unlikely since it is unsustainable in the long-term. Scenario 4 could be possible. Therefore I think there is a high chance of de-escalation. But to what extent will it de-escalate and how will it impact the economic data? There might still be some level of tariffs on the major economies even after negotiations or de-escalation, and that would weigh on the economy. Since there are too many variables and moving parts, I can imagine it is very difficult for experts to provide accurate forecasts. Hence there will be much uncertainty and possible volatility when the actual data is released in the future, especially when the actual data mismatch the forecasts. 

So far, my nibbling has been profitable. While I don't think the rally will go all the way back to all-time high, I think the market has bottomed out since both sides are trying to avoid negative outcomes.  Any big dip could be worth accumulating. I have been doing hedging using volatility ETFs which I prefer for various reasons that I may reveal over my next few posts.