Trying to figure out yesterday. Among the causes; upcoming end of fiscal year for corporate/public pension plans and their re-balancing to equities, short covering, speculator buying, short covering, early day foreign buying and short covering. And, the Yen finally falling which reduced the carry trade between Yen/Dollar.
And, of course, bargain buying. But such a day is a value investor nightmare as opportunities vanish. Alcoa, for example, had declined almost 50% in October. At $9/share with a 6% yield it was too, too tempting. But it took the rally to give investors confidence to step up. Shares gained more than 20% yesterday
A follow-through is necessary for yesterday to be a confirmation of a bottom. It doesn’t have to be today but certainly by Friday. Without follow through we are probably in for more of the same. Troubling, too, is the lack of the traditional capitulation.
A .50 bp cut is baked into bonds. Should Fed cut only .25 watch out below. Should we get .75 cut we could rally.
Watch out for S&P 840, one hundred points below yesterday’s close. That’s support.
Pre-market: Equity futures rolling over, gold up, dollar weak, crude up.
Kept my EEM (Emerging markets ETF) overnight but will feed it out this AM.
