Market Rallies Sharply Into The Close

Now that is the kind of rally this market has been missing. The S&P 500 unofficially rose +2.85%, which according to my records looks like the largest rally since April 1st. Financials rallied sharply, with the bank index surging +5.5%, probably on lots of short covering.

Retails stocks also fared well, with the retail index gaining +5.4%. Transports spiked back above their 50-day, rallying +4.9% for the day. And tech stocks also acted well today.

The market obviously was not worried about the Fed's comments on inflation, and took to heart the message that they are likely on hold for the time being (from raising rates). Oil continued to plummet into the close, which helped boost the broader market.

All of those folks who were citing high oil prices as a major problem, and one that could result in a global recession (I was one of them) should now recognize the fact that a 20% drop in crude prices from their highs is akin to a global tax cut, as one of my colleagues put it.

The dollar was solid all day, which also helped take the bloom off the commodity rose. Now we just need to see some follow through from the market on top of this rally. The VIX fell -10.3% today to 21.08. The breakdown in the volatility index is another bullish sign, in addition to the rally in the financials and the drop in oil.

I have been busy catching up all day, and will try to post on the sentiment indicators later (sorry)