Well first off our seasonality data which has been remarkably accurate all year so far.
But more importantly:
Look at the bottom in March 2020. 30 March. 1 April we made the move higher.
Why? The Fed. rode to the rescue.
Look at the 2020 data. Now I couldn’t circle or mark this (beyond my technical skills) but the peak of the Fed. intervention via RRPs was 30 March/1 April. Now look at the latest data. The max (so far)…28 May.
The market was seriously wobbling in mid to late April. It could have fallen apart in May. But it didn’t. Buying support came in. The Fed. The stock market is a massive carry trade that cannot be allowed to unwind. Not anytime soon anyway.
Look at 2017. The last big RRP intervention.
2016 was wobbly. Boom in comes the Fed. and the market just takes off to the upside.
2019 was the Taper Tantrum. Far from coming into the market, the Fed. was trying to takeaway support. Stocks started to crash. The Fed. caved. Stocks resumed their upward trajectory until the extrinsic shock.
The size of the current intervention tells us something of the risks in the market currently, hidden from view below the surface. While I have no evidence, I would suggest that the blow-up of debt lies somewhere in there. Somewhere in probably the financial system (banks, hedge funds) there is or has been an issue.