I have four ideas as to what was in the minds of traders:
- There is a stock market saw: "sell the rumor, buy the news" (and vise versa). There has been a worry about the beginning of "tapering" code word for the end of QE for some time. And who knows, that could have set the agenda for the pull back we have seen for the past couple of weeks.
- Bernanke, in his last statement as Fed chair also indicated that interest rates would stay at their low levels for longer than had been previously indicated, past the point when jobless fell to 6.5%. This could have given traders confidence. Low interest rates, high share prices.
- The announcement had lots of good things to say about the economy so it might have boosted views about company performance
- It could be a bull trap. A false rise to lure in uncommitted investors so the smart money can cash in bigger profits on their holdings
Hope you all have a happy holiday. I know I shall.