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Discussion
If you follow Michael Howell (Crossborder Capital) you know there are two key indirect sources of financial market liquidity that are key to monitor for a turn in liquidity conditions: USD and Oil.
Both USD and Oil have turned lower over the last few trading days, and against the backdrop of Yellen selling a put, it’s clear liquidity is beginning to flow back into financial markets.
Unlike yesterday’s pre-market trading, this morning Bitcoin is curiously perky despite relatively muted equity market action. Bitcoin is perhaps the purest form of a liquidity indicator, as it has little to no fundamental value and is thus a pure representation of financial market participants’ willingness to trade ‘air’ back and forth.
In short, look for a tactical rally in SPX to begin today in earnest.