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Market Rally: Just a Lot of Hot Air?

If you're wondering what's going on, why we are getting this rally -- don't get too excited. There's very little behind it.

It's being driven by:

1) The quadruple witching expiration (the quarterly expiration of stock and index futures, and stock and index options), which means traders are "rolling" into new contracts (we are already at record volume for the first half hour); and

2) Generally oversold conditions, which means some shorts are feeling the need to cover positions. Also remember hedge funds seem way underinvested here, so there is a definitely possibility for a short, sharp rally at any time in the next week.

Major indices mostly flat this week (Nasdaq up 1.5% being the exception); S&P 500 down 3% for the quarter; if this keeps up, we will have the first negative fourth quarter since 2002.

Questions? Comments? tradertalk@cnbc.com

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