How much was post-options? How much was hope about averting the fiscal cliff? Or how much was performance anxiety because last week at this time so many hedge funds decided they couldn't take the losses anymore and had to preserve whatever gains they could muster?
I think the latter played a key role. We were most certainly oversold Friday and this bounce continued nicely today. I just think that with this being a seasonably strong week and with the president calling business leaders to ask for their help you have a scenario that could develop where the hedge funds miss an opportunity to finish up mid-teens, something that they can't do if they are already on the sidelines.
I could see some of the money go into the banks simply because there aren't a lot of gains to be taken so the capital gains issue is off the table with the group. I saw some buying in tech that seemed similar. It was almost perfunctory, as in, "well, I guess I have to play a little so give me something that doesn't have a lot of gains in it that won't disappoint."
To me, this one felt that it might have some legs IF we just get one Republican, just one, of any prominence, saying "there might be more common ground than we thought." We get one person to switch direction, which has been real hard to get, then we have something that will allow us to continue. Without it we refocus on the cliff and on Europe, where France was downgraded.
There needs to be continuous momentum here, or else, frankly. Every day that we DON'T hear something good will be a day when we give up some of today's gains. It is that unsustainable without help from Washington because it is Washington that's put the lid on this market's price-to-earnings multiples.