The last two years have been
extraordinary. The stock market has surged higher as corporate profits
continued to climb and the Federal Reserve’s aggressive QE3 bond-buying
program, which was announced in September 2012. Charted side-by-side,
the relationship between higher stock prices and cumulative Fed bond
purchases mirror each other closely as the S&P 500 has gone on to
gain more than 40 percent.
Aside from the
magnitude of the market gains, the smoothness of the rise has been
noticeable as the steady flow of cheap money squeezed out volatility.
The S&P 500 hasn't even touched its 200-day moving average since
November 2012. That's a streak of consistency totaling 464 trading days
and counting. That type of consistency has only been seen three other
times since World War II: In 1998, 1965 and 1956.
Have things gone too far? And are they set to change?
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