The markets had a choppy week as the noise trader equity rally ran out of steam and reversed somewhat, before the Fed once again provided support, this time through direct buying of US corporate debt.

Never fight the Fed as they say and yesterday we saw a subtle tweak in their Credit Buying programme that has essentially made the Fed the buyer of last resort of the entire US corporate Bond market.

As discussed in Friday Market Thinking, we would expect the professional traders to try and bounce the amateurs out of their newly acquired positions with a shift to a glass half empty stance this week.

Well that didn’t take long. At the start of the week we noted that the noise traders had been making one of their periodic forays into equity markets and pointed to a number of ‘red flags’ suggesting that fear was turning to greed.

The attached article is one of the most fascinating that we have read in a long time and in many senses one of the most important.