A trader, who prefers anonymity, offers a plausible explanation as to why the market might be rallying.
“We’ve had some data, which superficially appears to show some strength. There are a lot of shorts built into this market heading into ECB and they have been forced to cover on the back of ECB putting in place enough stuff which takes out systemic risk and what you get is an allocation to U.S. equities.”
Or in simpler terms…
“There were a number of people who had a particularly negative outlook on the market. When they were wrong, as confirmed by better-than-expected economic data and an ECB which is taking action to help the eurozone economy, those people had to take off their negative bets as a result it created buying pressure in the market and that’s why we are rallying.”
So this might be panic buying, meaning those people who placed negative bets and those who aren’t in the market rush to get in.
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