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So the Fed threw us a bone by removing their tightening bias from their policy directive. Reading between the lines, they are saying that they see the weakness in the housing market, and they are not going to raise rates to make it worse.

Moreover, if things continue to deteriorate, they stand ready to provide liquidity and even lower rates to help prevent a financial crisis.

This was the green light to buy stocks, and investors wasted little time putting money to work. I also think it sparked a big wave of short covering, which could continue.

The SPX rose +1.7%, while the NDX gained an impressive +2.2%. Volume expanded nicely today, making for a solid accumulation day. If you follow William O'Neil's philosophy on follow through days, then this was a textbook follow through on last Wednesday's high volume reversal. Today was day 6 from that initial rally attempt, and the market gave its stamp of approval.

The brokers led the way (+3.6%), followed by homebuilders and biotechs (+2.7%). Consumer staples lagged (+0.95%), but all major sectors and indexes were up nicely on the day.

I don't expect the bears to rollover quietly, but they certainly lost the battle today, and in a big way.

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