A few days ago, I read a premium article over on ZeroHedge which went into great detail as to why the three components of what I call the Fed Spread – – most in particularly, the balance sheet – – which render all the Q.T. the Fed is doing moot. In other words, by their arguments, the market was going to roar higher this year anyway. I confess, I felt pretty empty-headed reading the article, because it didn’t really sink in, although it was enough to strike fear into this bear’s heart.

I was reminded of this just now, since it looks like our predictor of near-term S&P prices enjoyed a rise. It’s still beneath present price levels, but the gap is definitely getting smaller. Here are the three individual elements:

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Once they’ve been through the food processor, we can see the two week target for the S&P is 3846, which isn’t exactly exciting.

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The red shows the spread, which is still reasonably meaty.

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The next Fed meeting (which will be its first of 2023) is only nine trading days away, and between now and then, there are hundreds of high-profile earnings reports. There should be plenty of rough seas ahead.

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