Friday, April 1, 2016

US Stock Market Ignores The Previously Established Rules

Between 2009 and 2014 the US stock market was supported by the FED actions (the so-called "Quantitative easing") - look at the chart below:

On the other hand, every time the FED was cutting its intervention there was a significant stock market correction - look at the black arrows.

However, since March 2014 this rule does not seem to be valid anymore. Since that time the FED had not only limited its actions but even stopped it totally (the lower green ellipse). What is funny, the stock market does not care about it (the upper green ellipse). I would even say that the trend followers had beaten the FED and currently the stock market is under their control. 

One of my readers even suggested that what we see now is the result of the actions of the so-called Plunge Protection Team. Well, maybe but, please, remember that in 2000 and 2007 many people were saying that as well....

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