Massive short covering up into close

Some back and forth, good news / bad news reports coming out all afternoon on the mortgage front. In the afternoon there was another company which announced it has suspended taking applications. Then later Goldman Sachs cut their rating on Bear Stearns. Appeared to be large short covering heading into tomorrow.

My thought on this is that no one knows what will happen tomorrow. I don't think anyone wants to be long or short as the key to the next market move is in the hands of the FOMC. What happens next will come from them, and only the brave are placing bets ahead of time.

I will wait until tomorrow when the announcement from the FOMC is made to decide if I will trade on the long side or short side of the financials. Keep in mind the move on the major indices today can have been very easily been mostly the result of shorts covering. Remember, it had been reported the levels of short positions in the market was anticipated to be at incredibly high numbers, if not historic levels in the financial sectors. Going into tomorrow if the FOMC says something to rally the market then the shorts will not only be fighting each other to get out of the way, but they would have been fighting big buyers on the long side. So it is not impossible to believe that a majority of the moves today were from the short side moving aside before tomorrow.