There is also the possibility that this is just another trading day, and this market will lose steam by the end of the day as traders take short term profits. With no long term conviction, traders may pull out prior to the close not wanting to risk another news event shattering the market after the day is done and the lights have gone out in their offices.

The overnight rate currently stands at 3%. The rate has been cut aggressively several times and with each new reduction the dollar has weakened and oil and gold have gone up. If speculation is correct and the Fed reduces rates by a full point to 2%, then they will also be using up their supply of magic bullets. So far, the lower rates have been helping to support the stock market and banking system. That's certainly important but there has been little relief yet in the housing market where higher margin spreads on loans for housing and construction have prevented much movement lower. In addition seniors and other fixed income dependent people are going to see their CD rates fall and things will only get tougher on them.

Long term market valuations are based on corporate growth and profits. Not too much of that has been reported as of late.

Update 2:30 PM EST: Fed cut .75% reducing rate to 2.25% -- Dow FINAL up 420.41 points to 12,392.66 (3.51%)

Sheldon Liber is the CEO of a small private investment company and the design and research principal for an architecture and planning firm. He writes Chasing Value and Serious Money columns.