Asian market were overwhelmingly positive last night. The Shanghai index made an all time high. That's right, the pesky market whose 9% drop started all this mess has erased all that and some in little more than three weeks. The US market was unimpressed, however, as the action before Fed announcement was positively soporific. The lull turned out to be preparations for a most vertiginous move: from about 2:15 to 3 pm, the Dow ascended some 190 points.
The catalyst for the move, was supposedly removal of this sentence from the Fed statement:
The extent and timing of any additional firming that may be needed to address these risks will depend on the evolution of the outlook for both inflation and economic growth ...
There are other nuances in the statement related to inflation and economy, but the market chose to focus on the possibility of a rate-cut. Just about everything in sight shoot up. Even HUI outperformed. On the other hand, the dollar took a cliff dive as can be expected.
After last Wednesday's reversal, I noted that the market had likely put in a short term bottom. Today's action is confirmation that the uptrend will likely continue longer than the couple of days originally anticipated. Getting out of those IB and homebuilder shorts was definitely the right move.
While I think we'll see more upside testing, I'm not rabidly buying either. The housing story is far from over IMO. But for now, I'm standing aside to let the bulls exhaust themselves. I'll monitor closely the emerging markets, broker/dealer and home builders as they will likely telegraph the next move.