The main topic of conversation among traders today wasn't how great the action was but how irrational it felt. There was no way, based on either fundamentals or technicals, to anticipate this sort of market action. One trader commented that he could not remember a day when he found the action so puzzling.
Of course, the mainstream media will always find a causative factor for a market move and Ben Bernanke was the easy choice today. The fact that he really didn't say anything new is irrelevant. The mere fact that he appeared before Congress is enough for a headline that he was the catalyst for the market action.
What was particularly surprising about the market action today wasn't just that it was the complete inverse of Monday's action, but that it occurred on much lighter volume. Typically, a spike of this sort would occur on a surge of volume, but that isn't the case when the main driver is the computers.
Even for those who believe the market action is more manipulated than justified, there is sufficient performance anxiety to turn them into buyers. If you want to make money, the only way is to hold your nose and play along. There may be no good reason for this sudden spike but that doesn't change the fact that the way to make money is to embrace it.
My view on Monday was that the market was starting to undergo a correction. The action today calls that into question, but I'm not ready to change my market bias. The action today definitely surprised a lot of people, but I don't expect we are going to be able to make it through the recent highs that easily. While I'm not going to try to short this sort of action, I'm not that trusting of it either.
Have a good evening. I'll see you tomorrow.