You pretty much nailed it. The WSJ was quoting trading desks and hedge funds yesterday who basically stated that some big players got short this week; Thursday was basically a squeeze. I tend to believe that.
Perhaps the market has been going up because the smart money is coming out of real estate and into stocks.
Market went up on a short squeeze. ML said that there was 45 billion short the S&P 500. The run started on the SSS sales released Thursday which came in better than expected for most retailers. Fri retail numbers didn't look that great yet market jumped again. This is an all out bull market that will run for another year. Historically election years are great for the markets. This market is resembling the real estate bubble as there is no real reason for all this speculation. The dollar trading at a new low to the euro and a 30 year low to the pound. Oil is at $74 a barrel. Sub-prime problem is massive in scale and is being swept under the rug. I see the market going up 2 steps for every down step. Look for the market to take out 14K on the DOW before a 300 point correction. In another year all good things will come to an end. Till then the trend is your friend.
if you take the premise 95% of the people loose at speculation then, the 5% status or positional bias dictates the next swing of the market. since in futures, if your long someone else is short, a concentrated 5% will rout the other 95% on intraday moves. Even the participant number is higher, 5% of the speculators will hold contract sizes that equal or offset the other 95% of the market who will hold 1 - 10 lots. meaning a group of large hedge funds will hold contracts in the thousands range to almost exchange limit sizes. large brokerage houses have a treasure trove of statistical real time information minute to minute as does the CFTC. If the brokerages analyzed what the position bias of their small retail clients versus large clients. The next days risk or rubber band is predictable in which direction it will break. its the same thing as bucket shops running stops in fx, but its much more sophisticated then Livermore's time. A more detailed COT report is available then what is handed out or made available to the general public.
Well, there you go - read this entire thread and you realize it's all guesses and speculation why something happened. No one knows for sure. It's probably a combo of everything! I'm not sure how or why this is useful for a daytrader, but it's entertaining reading all the guesses!
============ May not believe it, but like old turkey said, old book; ''its a bull market you know.'' Probably shorts helped fuel rally again. Its also a good place to liquidate longs, SPY,QQQQ.......; noticed some did by end of day