After the Fed lowered rates by 1/2 point, everyone knew the market would enjoy a nice ride. However, I didn't expect the cut to propel the Dow near 14,000, a place the index hasn't been since July 23rd.
Even with the rate cut, the housing market continues to struggle, while analysts believe it could be a year or two before there is much stability in the sector. I think the ripple effect from the housing slump will be company earnings. I would be extremely surprised if many Dow components beat the street in the upcoming quarter.
My concern is that there just isn't much driving the market right now. Although the rate cut helps, I question the long term sustainability of any major market rally. I hope I am wrong here, but based on historical valuations of the market, we may be headed for another correction.
This is a good time to be liquid!