It appears markets fear the Fed and seem to expect an intervention by them to save markets once again. But it’s a thin reed for the rally’s explanation we read below from Zero Hedge:

BULLARD: HAVE TO HIT A BOTTOM ON OIL PRICES ‘SOMETIME’

While not as explicit a warning as his October 2014 “QE4” hint, algos quickly read between the lines, and realized that if the Fed were to escalate a line of though in which only low oil prices are preventing the Fed from achieving its energy mandate, then it is quite possible that the NY Fed trading desk would simply enter the energy market, and push oil to the “appropriate level.”

To be sure, we joked that Bullard bailed out the market again, but as of moments ago it is no longer a laughing matter because in a note released by Jefferies’ economist Thomas Simons, it was the Bullard comments that were again laid out as the catalyst for the ramp.

According to Simons, while Bullard had been “quite hawkish recently”, his comments today “represent a significant turn in his opinion.“Jefferies adds that “Bullard is acknowledging that risks to higher inflation are quiet low given the recent developments in commodity markets.”

Jefferies concludes (sic) by saying that comments suggest that FOMC’s 2016 voters “might not be quite as hawkish as we thought.”

In other words, Bullard may have just hinted at the first Q(ommodity) Easing.

So does that mean that the Fed is willing to sacrifice its last shred of credibility to support and prop up commodities (read oil) and thus stocks? We don’t know, but we do know that there is an uncanny resemblance between the market’s action before Bullard’s October 2014 “QE4” comment and the market over the past few weeks.

But the real question is what happens next, because if October 2014 is any indication then we are in for a massive “rip your face off” rally as the market once again prices in another “Fed intervention” round.