Wall Street rose sharply Tuesday as investors grew more confident that the Federal Reserve will lower interest rates next week, even after its chairman gave no clues about the central bank's intentions. The Dow Jones industrials rose 180 points.
Earlier, Bloomberg had a different take:
U.S. stocks rallied the most this month on growing evidence consumers are weathering an economic slowdown and bolstering profit growth.
I think the rate cut idea is probably the best explanation. However, traders are failing to take into account the split nature of the Fed's perception of the overall picture. Right now traders want a rate cut, but there have been some pretty hawkish statements from several Fed governors over the last few days.
The markets are in a one and a half day rally right now. Notice the nice consistent upward trend. Also notice there was a big buy at the end -- which is usually a bullish indicator.
Here's an 8-day chart. I'm putting this up to show the market is still trading near important Fibonacci levels from about a week or so ago.
Finally, here's the daily chart. Today we moved up from the 200 day SMA, but the volume wasn't that impressive. In addition, remember these charts on market breadth which just aren't that enticing. Underneath the surface of the market we're seeing some indecisive trends that don't inspire confidence.
