In what was the best two days for the DJIA and the S&P 500 in 2014, the DJIA soared 709 points Wednesday and Thursday while the S&P 500 rose an incredible 88.49 points during the same period.
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The DJIA gained 421.28 points on Thursday to close at 17,778.15 and the S&P 500 was higher by 48.34 points to finish at 2,061.23.
The Nasdaq tacked on 104.08 points to close at 4,748.40 while the Russell 2000 was higher by 17.33 to close at 1,192.16.
So, what are traders and investors to make of this incredible two-day run in the stock market?
It is very hard to imagine the stock market move higher was generated by money coming into the marketplace from new investors. It appears that, once again, the hedge fund community was caught leaning to the short side after the most recent selloff over the past week.
What is quite interesting in support of the hedge fund buying spree is the S&P 500 Trust Series ETF (SPY) volume the past three days has shown roughly 253 million shares traded each day. As the hedge funds normally act in unison, after Fed Chair Janet Yellen seemed to postpone any rate hikes to well into 2015, the hedge funds had to scramble and cover their short positions. When short hedge funds cover their short positions at the lows, it seems the stock market stages a massive rally to the upside.