In my view, the recent upturn was driven by the following factors:
- Solid third quarter earnings reports.
- Oil dropped from $70 per barrel and has stayed below $60 for weeks.
- Solid consumer confidence numbers suggesting a strong retail holiday season.
- Lower inflation expectations.
- The expectation that the Fed is near the end of its tightening cycle.
With this remaining uncertainty about the Fed in the near term, any good economic news will cause worries that the Fed's tightening is unfinished and drive stocks down while negative economic news would trigger the opposite.
My forecast is for a choppy market through the end of the year. A Dow above 11,000 this year is looking about as likely as a white Christmas in San Francisco. Oh well.