Insufficient Liquidity For Sustained Rally In Stocks

US macro liquidity was flat again in October. Over the past 12 months, the SPX has risen 3%, while the Composite Liquidity Indicator rose by 3.7%. That they are tracking this closely is a bit unusual, but the fact that they continue to trend together over the intermediate and longer term is consistent. Even the slopes of the trends tend to be similar over longer time periods. That tends to support a bid for stocks when prices sell off. But it has been insufficient to push prices materially higher since mid-2014.

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