Market Rally Holds: "Last Hour Sell Off Spell" Broken?

The rally held. This was an important day, a day where the "sell in the last hour" juggernaut was broken, at least for the moment.

There are many reasons, but short covering is the key:

1) Short covering in financials
2) Heavy cash positions
3) Oil down 7.3% this week
4) Fed's Kohn, saying that if tighter credit conditions made credit more expensiveand discouraged spending, it "would require offsetting policy action," has kept rate cuts alive
5) Fed's Beige Book supports the idea of continuing slowing, also keeping rate cut hopes alive
6) seasonal rally hopes

Note that there are a lot of "hopes" in here. The moves we saw in certain stocks were extraordinary and for the most part occurred on heavy volume:

Freddie Mac up 14% (among financials)
Merrill Lynch up 9% (among brokers)
Cemex up 8.6% (among emerging markets)
AMR up 7.3% (among airlines)
Limited up 7.9% (among retailers)
Standard Pacific up 8.1% (among builders)

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