Was Yesterday's Rally a 1-day Wonder?

I was hoping today would turn out to be one of those quiet days that I call benign consolidation. But that was wishful thinking. I guess that's why they say you need to accept the markets as they are, and not how you wish them to be.

The COMP gave back all of yesterday's gains. So much for the market having any day-to-day memory. But the SPX fared better, giving back only half of yesterday's rally. And volume levels declined, so we avoided a distribution day.

The companies that reported strong earnings yesterday (AAPL, MOT, EWBC) were able to buck the weakness and close up nicely on the day.

After the close, we had some very strong earnings reports from tech bellwethers GOOG, MSFT, and biotech bigwig AMGN. All of those stocks were nicely higher after hours. Of course there are the BRCMs that will hit new lows tomorrow, but the other companies are more important to sentiment.

The 10-year yield closed lower at 5.03%, well below the current fed funds rate. And commodities from gold to oil all finished lower. The FOMC minutes basically acknowledged the slowdown underway, and sounded more dovish than previous statements. I continue to think the Fed is done raising rates.

The CEO from DR Horton said that sales have "fallen off the Richter scale". That's a pretty bold statement about the weakness in the housing market, and I don't think the Fed wants to risk a hard landing in that sector, as that would likely imply a looming recession.

In prior market bottoms, we have seen days like today that turned out to be headfakes, or just a misdirection day that kept the bulls off balance before the rally resumed. Given the aciton in the SPX today, that is how I see things currently, and expect to see a follow-thru rally next week.

long AAPL, AMGN, EWBC, GOOG, MSFT