[Various sources include Colin Twiggs, Keystone Speculator, JPM, zh, Nomura, and Pasta]
Beware the eventual test of the December low, BUT…
Nothing matters except central banks.
The central bankers are the market.
Powell got a bit “dovish.”
ECB’s Draghi hinted that their easy money policies may continue for a longer period of time.
BOJ promised to maintain its easy monetary policies with no plans to change course.
China promised stimulus and offered to go on a six-year buying spree to ramp up imports from the U.S.
But focus not only on central bank “jawboning,” and our FED potentially pausing rate hikes, but ALSO watch what the FED is doing with its balance sheet.
"By now only clueless hacks will deny that adding liquidity in the form of QE was the single, most important factor driving asset classes higher over the past decade. According to JPM, the impact of QE was ~20% of equity prices."
Conversly, “there is no denying that the shrinking of the Fed's balance sheet [QT] does affect the S&P in an adverse way.”
Most macro traders will not "fight the Fed", meaning when liquidity is added they are buying assets, and when liquidity is removed [in the WEEK that large amounts of treasurys are scheduled to mature] they are selling assets.
This is the QT [Quantitative Tightening: when treasurys mature or “roll”, the FED is not reinvesting the proceeds] schedule that traders reportedly have taped to their screens. (Go to the H1 2019 column and move down to 23-Jan, 30-Jan, etc):
https://www.zerohedge.com/s3/files/inli ... k=MD0kESLk
And this is the effect of QT on the balance sheet in histogram form.
https://www.zerohedge.com/s3/files/inli ... k=Kui1xZeL