S&P 500 Bull run since December 2023, with the NASDAQ 100, oil price and U.S. Dollar. Is this a reflation trade on rate cuts or a speculation trade? S&P 500 pierces through the psychological 5000. 1st time in history.

Are markets way ahead of themselves?  Probably.  As the once forward indicator that it once used to be, what is occurring now is an off-kilter variation of the Reflation Trade on the expectations that the Federal Reserve will cut rates on a U.S. slowdown.  Except there isn't a U.S. slowdown, and there isn't any deflation, anywhere.  So why are stocks mega bid on a bull run of greed?

The main reason is that the Fed have embedded inflation into the economy, but not jamming rates up over 6%, then a pause could be in order, instead they kept the key rate at 5.50% at the end of 2023, basically igniting a rally.  And since officials, on a good day, don't offer guidance apart from the odd jawbone 'speech'.  The market has read this as a possible rate cut in March 2023.  However, in late January 2024, Fed chairperson Jerome Powell poured cold water on expectations of coming cuts, saying "Inflation is still too high".  Stocks sold off, with the S&P 500 falling 0.5%, but still overall bid.  

The secondary reason is earnings, more so the Tech sector, which in an inflation economy, Growth stocks tend to lag below Cyclical stocks.  This has hasn't happened.  Insead in the bubble leading indicators, Tech via the NASDAQ have drawn up the S&P and Dow simultaneously, with Bitcoin and Crypto following suit.  Indicative of the $Trillions awaiting to be thrown into speculation trades, which would be the Bitcoin ETFs and AI 'chip' stocks.  

So, what is interesting about this rally is that the USD is also bid, holding onto early December 2023 highs of 104, prior to the Fed not increasing rates end 2023.  Oil has in turn risen, and there has not been a major sell off re: escalation in the Middle East, since Israel's invasion of Gaza October 2023.  Which is showing that Risk Aversion lurks beneath the surface of this rally.  Despite the 'reflation' bull/bubble stock run, it is purely on the back of speculation.

For the 1st time in history, the S&P 500 is sitting above its newly found psychological support of 5000. 

Supports beneath 5000 are at: 4750, 4860, 4940.

Please refer to the above Chart:  S&P 500 performance since December 2023, with the NASDAQ 100.  Price/date points, Call Out notes.  Below pane, WTI (oil) and the USD futures.