The action this week does indicate that the recovery horizon has been pushed out further. Investors are now pushing the horizon into the next year or perhaps even after that.
This rally looks sustainable because the gains are smaller. It is not like you have a 250-point gain in one day, which is hard to keep up.
I think next week's meeting will be absolutely crucial. If the half-point rate cut is not materialized, the market is at risk of going down from these levels.
The fact that the Wednesday rally was not sustainable is a cause for concern. It shows that the market does not want a short term solution. Much of the reaction was euphoric.
I think investors are asking why the Fed acted so quickly and so decisively.
Overall, fourth-quarter earnings growth will be weak because the economy has slowed much faster than people had expected.
Despite whatever has happened, investors are still in the mood for a bargain.
October is a bad month anyway. Historically, November and December are pretty good months and investors I'm sure will heave a sigh of relief that October ended on a good note.
It is a classic indicator of a bull market when stocks don't go down even on bad news. It is a positive thing for the short term.
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