The tech sector rally for starters. Yesterday marked a continuation of the Muted Reaction to the Positive that we have noted over the past two weeks. There has been a subtle shift in sentiment over the past few weeks. In the recent past investors would have overlooked Dell's margins and concentrated on the positive, but now with euphoria ebbing, news is seen in a new light. The decline of euphoria poses no immediate danger to the market, but it does leave the market at risk if the unexpected should occur.
Underlying sentiment is still strong enough to hold the market aloft, but it has been weakened.
Yesterday's bond market rally also poses a double edged sword for the market. The Fed announced a change in its bias because it wants the bond market to do its dirty work for it, if the bond market fails in its task and economic growth picks up again on the backs of falling 30-year yields, the Fed would be swift to act. Apart from the stock and bond markets, we also have one eye on the dollar's recent rise against the yen and its potential implications for the profits of U.S. multinationals if the yen's weakness continues. South Korea continues to lead the Asian nations in the pace of its recovery from last year's regional economic collapse. The bond market received what it wanted and the stock market received what it anticipated yesterday afternoon.