Despite Wednesday's aggravating selloff into the close (with 10 minutes remaining the market rolled over and ended down for the day), not everything followed the Dow and S&P 500 lower. Today was positive because the market did not fade into the close and it closed higher on a day when it gapped open (opened higher than the previous days close).
There are still hedge funds unwinding positions, mutual funds that are being forced to liquidate, but right now it seems to be easing up. The Fed rate cut is going to make it hard for investors to justify holding cash in low yielding money markets, treasuries, and other cash investments which will not keep pace with inflation. Stocks as a whole are very cheap and I think we are starting to see bargain hunting come in. The powerful moves higher on October 16th and 28th shows that there is definitely interest out there. Volume on those days was also strong.
While no real leadership has emerged yet, some of the quality names are showing signs of life and should be able to recover quickly should the market continue to move higher from these levels. So many stocks were hit that it will allow fund managers to really cherry pick in here. Further, if the market continues to move up, the fear of missing out will force them to buy. Investors at some point will also begin to put their toe in the water. However I don't want to get to far ahead.
The Russell 2000 index was the biggest gainer today closing + 4.7%, followed by the Nasdaq +2.49%. Advancing stocks beating declining stocks by nearly 3 to 1. On Tuesday, volume flowing into stocks that were up on the day beat down volume by a 19-to-1 ratio which is very positive as well.
Arthur