Like I said on December 1st, on December 2nd, on December 3rd, and on December 5th (I just didn’t get a chance to on the 4th), the only price that matters is the closing price. I also said in each blog/rant that the bulk of any change in the closing price was the result of the last hour of each trading day. Lo and behold, we’re seeing it yet again today. Stocks were in the red until about 1:30 PM EST, then everything radically changed. As we rung today’s closing bell, the bulls were still accelerating, up 3% for the day. That last hour of trading is still where it’s at. Wow. Anyway…

Folks, investors want to be buyers here. Except for Monday, each day this week has given us very strong buying right before the session is over …. the decision-making time. And Monday is a different beast altogether. People are weighing their odds - albeit carefully - and deciding the bigger risk is NOT being in the market by the time the next morning’s opening bell is rung. That’s bullish.

But what about values? Yeah, we’ve had this conversation before too … the idea of valuation was tossed out the window a long time ago. It was replaced by hysteria and irrational logic. (I’m pretty sure ‘irrational logic’ is an oxymoron, but you get the idea.)

I fully see all the fundemental problems most companies are facing now, and will face in the future. The problem is, the market way over-estimated just how bad things would be, and how long things would stay bad. I still don’t think anybody has a perfect bead on what valuations should be for most stocks, but based on this week’s action it seems like most investors realize the end of the world isn’t quite nigh.

Check out the intra-day chart of the S&P 500 below. You can see how well the market did near the end of each day. Even on Thursday we saw a pushback off the lows, despite the daily loss. To see this kind of action on a Friday (in front of a weekend) is even more compelling.

I’ve got a newsletter coming out this weekend that looks at this idea (and others) in more detail. Specifically, I want to revisit some possibilities why Monday was so nasty, but was unwound over the rest of the week. Be sure to look for it.

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