No one would argue that the greatest marginal advantage for the bulls this year is being provided once again by the US Federal Reserve. Reports of outflows from Europe into the US has helped the upside lately but may create an unwanted technical burden to equities. While the Fed promotes equities via the bond market where it has a direct hand intervening on the cost of money, the door always swings both ways in stocks. Notions of value and safety are always the last criteria met before a decline.
Some interesting numbers from QRiskValue. Despite all the claims of market volatility, this year has been the least volatile of the last five and a half years when measured by total range. From the beginning of the year until last Friday, the S&P 500 total range has been just 160 points compared to last year at this time of just over 300 points. The last time it was this skinny over same time period was 2007 at just under 200 points.
