The psychology of the market is incredibly important here. Now that we are back to even for the week, do people sell or buy?
My experience is that this is when people buy. It's kind of like an all-clear. They would rather buy stock knowing that it looks like things are all better than when you could get great prices in the free fall.
That's why I think you are seeing buyers come off the sidelines and out of the woodwork because they recognize that the big declines might be behind them.
I think we can't tell.
If the wrong Fed official came out right now and said, "This is the stabilization we have been looking for," we could go in reverse.
In the interim, though, the "Lord, get me back to even so I can sell" crowd seems to be less powerful than the "this is my chance, I better get in now" contingent.
So, augmented by oil's rally, we go higher until a James Bullard or a Dennis Lockhart -- two Fed officials most responsible for the sudden declines -- speaks out that this is the stability we need to move.
Remember, all I want is silence from the Fed so there's no indecision. Yesterday's comments by New York Fed President Bill Dudley were not hawkish or dovish --they were thoughtful (thank you, writing colleague Matt Horween, for that subtle way to put it), and that's all that's required. It would be sensational if every Fed talker was simply thoughtful because that's all you can ask from the Fed.
Suffice it to say that this is the Dudley rally and if it ultimately leads to a Fed tightening because the rest of the world is more secure, so be it.
At least it wasn't something that brought the house down, as Bullard and Lockhart almost succeeded in doing in the two days previous to the rally.