Why no rally on the strong nonfarm payroll report? Three reasons:
1) QE2 (quantitative easing) and improving economy together make trading trickier; the QE2 trade of shorting the dollar and going long commodities and commodity stocks gets a tad less profitable if the dollar bottoms or begins reversing its downward trend.
2) no change in the 9.6 percent unemployment rate is keeping strategists from getting too bullish: "Even steady gains near 150,000 would only move unemployment lower glacially," Citi noted.
3) The S&P 500 has already moved 17 percent since September 1, as traders have been actively "gaming the Fed" ahead of QE2.
(Second opinion: 'Fast' Traders: S&P Gains Mean Fed Was Right?)
More Market Views:
- Low VIX a Warning for Market: Strategist
- Dollar at Risk of Crashing: Strategist
- Art Cashin: Bernanke Is 'Walking a Real Tightrope'
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