In keeping with recent tradition, stocks blasted as soon as the cash session opened, sending the S&P above the key 4,400 level (more below)...
... while pushing the Dow Jones above its 50DMA of 34,914 for the first time in about a month.
The move higher got a further boost when the following Bloomberg headline hit, confirming that the debt ceiling vote had been punted for 2 months:
- *SCHUMER SAYS DEAL REACHED ON SHORT TERM DEBT DEAL
Yet while the catalysts are by now well-known, and include a sharp jump in Chinese tech stocks rebounded from a record low, optimism over progress on the debt-ceiling impasse in Washington, a dip in oil and European energy prices easing worries of hyperinflation, today's move was once again bizarre as it was led by tech names with energy names lagging while Yields jumped.
In short a mirror image of what happened on Tuesday which of course led to Wednesday's early rout.
Then again, what led to the move higher is irrelevant, and all that matters is that key technical levels were taken out, and sure enough as SpotGamma writes this morning, now that we are over 4400 there is no material resistance until 4450, with support down at 4365.
Furthermore, with 4400 a critical "zero gamma" level, SG notes that "any additional decline in implied volatility offers a smaller market tailwind, and if we shift over 4400 that tailwind will transition to headwind."
And while any close in the vicinity of 4400 would mean we are "not out of the woods yet", SpotGamma notes that "should the market close>4400 positive gamma kicks in and implied volatility (ie VIX) should reduce. This adds a vanna-based pull higher for equities."
In short, we may be looking at new all time highs soon.