In simple terms, there was a lot of put buying (protection) purchased in case the Fed made some kind of hawkish comments about raising rates.
That didn't happen, so those bets are being unwound. Volatility dropped. Today, lots of selling of puts, and buying calls.
There is also the quarterly expiration of options and futures (known as "quadruple witching"). There may be some effect on trading, but it is difficult to sort out.
But many traders believe at least part of this rally is due to the "Alibaba effect." What's that?
Read MoreWatch Art Cashin: Alibaba IPO lifting stocks
NASDAQ was a big underperformer on Monday, down over 1 percent. The theory is that many were selling certain tech stocks to buy the Alibaba IPO later in the week. There is a 3-day settlement period to get the money, so traders would get their dough on Thursday in time to buy Alibaba.
But many who put in orders for Alibaba apparently are not getting anywhere near what they wanted, so rather than buy at a likely very high price after the open many are buying back into the market. NASDAQ outperforming today.
This is a neat theory, but it is likely only a small part of the rally. Volumes are not particularly strong in any of the ETFs you would normally see big traders moving in and out of, even for an expiration day.
I don't know about an "Alibaba effect" on the market, but I surely do believe in a "Fed effect."