/biz/ - Business & Finance

another interesting chart i've been puzzling over, fed assets vs sp500. apparently there's been a strong regime keeping the market pinned to the balance sheet in place since 2008, where dramatic removal in liquidity starting before the 2020 crash ultimately settled back to where things were prior with the massive fed print.
the bottoms of the crashes in 2011, 2020, and the bottom in october 2022 are all almost perfectly lined up and the 2015 default crisis and chinese crisis get pretty close. this is probably the most scientific bottom predictor i've seen yet
as far as top indications, its less certain but the global top in jan 2022 is well captured and even was sold in a period of moderate weakness which helps confirm the health of the selloff. the fed was expanding the balance sheet during the run up and markets sold off before the end of the expansion, how considerate
as for now it looks like we've been holding at historical par value for stocks leveraged against assets despite all the hysterics recently of micro-scale QE/QT.

with the current balance sheet at ~$8.5T any immediate bottom this month would be ~3400 and a hazardous guess for a top would be 4670. but the difference is that the top has never been reached inside of a month, whereas the bottom has been reached multiple times before in nearly that amount of time. this contraction period is moving somewhat faster than the jan'18 to aug '19 period but for comparison a lot of weakness developed in the market for not appropriately declining in response to declining assets. in fact the market responded by oscillation between +8% and -16%. since the start of this current cycle, the market responded by moving between +1% and -18%