It's a very quiet rally but breadth is 3-to-1 positive. Why the rally? This one is pretty simple: the market tends to rally in the two days ahead of a Fed meeting.
I know, it's ridiculous, but it's embedded in trader lore.
Especially under these circumstances. Traders believe in the Fed put. They believe the Fed will end QE, they will say the economy continues to improve, but they will keep the phrase that rates will remain low "for a considerable period." They will reiterate everything is data dependent.
So, slow growth and a Fed put is a recipe for higher prices.
There's another factor: after the drubbing that many hedge funds took in September-October, hedges are getting taken off and net exposure is increasing again.
Look at oil stocks, which should be flat given that oil is showing no signs of rallying. But the main oil services ETF (OIH) just took out yesterday's opening to the upside. The commodity may be flat, but they are buying the stocks.