In yesterday’s post we noted that, with multiple indices at or near their SMA200s, it was put up or shut up time for the bears. In a time-honored tradition, the market was saved from a deeper correction by Fed President Jim Bullard with a notable assist from 6th man Larry Kudlow.
By declaring that no further rate hikes were warranted in 2018, Bullard got SPX/ES back above their SMA200s. Kudlow’s insistence that Trump was just joshing with all that trade war talk got both back above their SMA10s and helped ES break out of its falling channel, where it’s currently showing a 13.50-pt gain.
This was an important stick save, so the starters were left in the game until the outcome was certain. VIX broke down, the yield curve bounced, oil and gas rebounded, and USDJPY broke out.
The fundamentals haven’t changed one iota. In fact, the 10Yr gapped back into the territory that made stocks nervous in the first place. But, in a market that continues to be so heavily swayed by algorithms, that’s not necessarily important…for now.
Bullard and Kudlow are obviously very keen on propping up stocks — much in the vein of Bernanke and Yellen. It remains to be seen whether Powell will follow his predecessor’s lead or let markets sort themselves out.
continued for members…
Sorry, this content is for members only.Click here to get access.
Already a member? Login below… |