Our 'line dance' - choreography trotted around the 'Floor' as ideally desired; a combination of higher Treasury yields not inflicting equity pain, but gain; as Oil and Banks jockeyed for higher numbers; and even small caps joined-in.

In this sustainable? Probably not; certainly not at this pace; but it is another of the phases that can prove to be what follows a shakeout; not a catastrophe. It can be unraveled if the 'faint praise' thrown to the director of this performance, none other than China's President Xi (as Fed Chairman Powell's actions were mostly pre-ordained in our view) should prove to be fleeting. 

Meanwhile the S&P is right up to the 50-DMA again. China was reasonably in a sober mood, and 'blinked' (or appeared to) as I mentioned last night. As for the Fed, they remain accomodative and gave the anticipated 'soon' arrival for tapering; again in-line with what we'd expect. China remains a wild card just in event things don't get parsed-out to their big banks and so on.

Executive summary:

• S&P and Yields both rose; and that was the ideal pattern to give room for maneuvering above the 100-DMA and now a 50-DMA rebound challenge;
• I listened to the ABC-Austrailia interview of a CCP 'expert' threatening the use of nuclear weapons against the Aussies if they acquire nuclear subs; noting it didn't matter if they didn't carry missiles on-board; it was likely up there in terms of brutish bellicose militarism we're heard from China, and I note again in no uncertain terms the references to 'merging' Taiwan too;
• Meanwhile today's rally was about China blinking; Covid maybe peaking; and Beijing -which used to be Peking- blinking; plus the technical bounce.

Better growth; low enough rates; optimistic views on Covid emergence; and a structural move by China that 'implies' they'll assemble the myriad of pieces in the wake of a Evergrande default. More notably; everyone's sigh of relief. Of course that can change on a time if the PBOC decides; or if Pres. Xi sneezes.

Technically the bounce-back needed to get where it is; surmount the 50-DMA for more than a momentary spurt driven by short-covering; and then we'll see.

Prospects of a Government shutdown and such are mostly noise; presuming of course they don't happen (Chairman Powell added to the issue by saying it is incomprehensible). There might be a sudden need to hike rates but that's a consideration for next year; not now. Like I've said; not all inflation is transitory, but enduring. Wages, taxes, rentals, food; everything is going up not down.

So sure; a catalyst could show up to break markets anew; now that you have small stocks kicking-in too; but let's not get carried away. While the remaining few days of September and all of October can be view as 'treacherous', there is a 'silver lining'. The silver lining is that most (especially small and mid-caps) had months of correction; and it's the big stocks that were unadjusted excess.

Peak growth is supposed to be an issue; but it's not. It's paused due to both a supply-chain issue and Semiconductor shortage; but it's pent-up demand that slows things; not excess supply with insufficient demand.

That's inflationary of course; but it also suggest most stocks go higher once a path to emerge from Covid becomes crystal clear. So far it's opaque but you'll squint and sort-of make-out the objects ahead; ideally success not a wreck.

Friday will likely be up as well; at least initially; then consolidate; but could be ok into the weekend. S&P futures are ahead 12 points at 8:30 pm ET Thursday.