Losses Recouped

'Cause I'm back on the track
And I'm beating the flack
Nobody's gonna get me on another rap
--AC/DC

Major market indexes are up 18-20% from the Christmas Eve lows. They are recouped virtually all losses incurred during the December swoon.

As noted here, a major factor in the turnaround has been the Fed's signal that it will be more 'patient' w.r.t. future monetary policy moves. Market participants are interpreting this to mean that future rate increases are on hold for the foreseeable future.

There is also chatter that the Fed will prematurely end its 'quantitative tightening' program and operate with far more of those monetized bonds on its balance sheet than originally forecast. Stated differently, nearly $4 trillion of money created out of thin air by the Fed to purchase those bonds will remain in the system for market participants to enjoy.

The technical picture suggests that the current rally is getting pretty stretched. However, as past history has shown, eras of easy money and credit often facilitate overbought markets getting even more overbought.