Kate Townshend at MKM Partners and other technicians have pointed out that we are significantly oversold short term, so it's no surprise there is a rather significant bounce early on.
Expect a lot of short covering today; financials rallying big time.
The question is, does this break the prevailing trend, which is: buy declines, sell into rallies. This trade has worked for two months now, and you can be sure traders will make a run at bringing the market down again, if not today than certainly in the next day or so.
If this works, does it mean less Fed easing, stronger dollar, lower commodities, less pressure on inflation? That's what the bulls are praying for. The odds of a 75 bps Fed cut next week is down to 64 percent from 92 percent, priced in prior to the Fed's move.
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