Goldilocks Eats Bears' Porridge

"All corporations want to end the year on a strong note, so they throw the bad news into the third quarter," he says.

Measures of investor sentiment also show that traders are back to pre-credit-crunch levels of bullishness. According to Investor Intelligence, bulls have reached 56.5%, matching levels of market peaks in July after falling to 40.6% in August, notes Randy Diamond, a trader at Miller Tabak. Likewise, the measure of bears in the market has fallen to 25%, its lowest reading since July as well.

Bullishness brings out the short traders , as many investors automatically hedge when sentiment nears peak levels, says Diamond, adding that more short selling also means more short-covering rallies.

In sum, the mind of the market is cleared of credit clutter, reassured the Bernanke-led Fed will ride to the rescue if there's another crisis, and hopeful that the fourth quarter will show the crunch was just a hiccup.