This rally looks increasingly artificial and is led by buying in the SP futures, which was the trademark intervention established when Robert Rubin was Treasury Secretary.
This does not mean it cannot go higher, as the markets are awash in liquidity with no productive outlets that can compete with the easy returns of the hot money speculation machine.
Goldman Sachs, for example, is taking cheap money from the Fed and from funds guaranteed by the FDIC and turning them into profits by gaming the commodity and equity markets. This is what passes for banking in the US in this time of excess and imbalance.
It does imply that on news this rally could turn lower with some serious momentum.
What is lacking is solid volume underneath this rally. If buying appears from real investors as opposed to speculators then it may continue.
For now this rebound in US equities a slow short squeeze probably led by the momentum traders and by the bankers who met with Obama at the White House.
We'll know more when Obama produces the details of his discussions with them in keeping with the transparency he has promised. Or are the bankers to Obama what the oil companies were to Cheney?
The banks must be restrained, and the financial system reformed, before we can have a meaningful economic recovery.
