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I was trying to think what's the chink in the armor with the FED QE program. I mean it works like magic - a little bit of down market but here comes the FED with their QE or interest rate cut or whatever and the stock market will just follow like rats following the piper. It has been working like a charm. It almost seems too easy - too good to be true.
But after seeing how the market reacting to the corona virus, it does show the weakness or flaw of this strategy. A little bit of an external shock, and the market will just take a dive.
If you look at the S&P, it's right at about 3000 which goes back all the way back in 2018 which acts like a support line. The S&P 500 was at exactly at 2900 on Sept 2018. Therefore, so you could say all the run up since the S&P 3000 level has been just a FED rally - that is a rally based not on fundamental but on the FED QE. You can see the flaw of this strategy.
Of course all of these also has to do with the "algo trading", but I would say most of it was caused by the FED.
On the bright side, unless the virus things will get all out of control, I think the S&P 2900 level is the bottom. And if you blink, you might miss the rally back thanks to the "algo trading". I wouldn't be surprised to see a +2000 DOW points rally :-) There are just too much cash on the side line (thanks to the FED ..... sigh ......)
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