Click any row to read the full analysis for that support factor.
Report date: 2026-05-19
| # | Support Factor | Sig. | Support Breakers | Breaker Strength | Support Direction |
|---|---|---|---|---|---|
| 1 |
Belief in the Fed put Investors expect the Fed to ease, pause tightening, or provide liquidity if markets fall badly enough. |
5 | Inflation trap; bond vigilantes; currency weakness; political constraints; financial instability caused by inflation rather than deflation. | 4 | Down |
| 2 |
Passive investing flows Index funds keep buying according to index weights, regardless of valuation. |
5 | Rising unemployment; reduced pension/retirement contributions; forced household withdrawals; boomer retirement selling; prolonged bear market damaging confidence. | 2 | Flat |
| 3 |
Retirement auto-contributions Payroll-linked 401(k), pension, and similar flows create steady recurring equity demand. |
4 | Job losses; wage stagnation; retirement drawdowns; contribution cuts; pension de-risking into bonds. | 2 | Flat |
| 4 |
Corporate buybacks Companies buy their own shares, reducing share count and creating direct bid support. |
5 | Profit recession; higher debt costs; tighter credit; political restrictions; management conserving cash; falling share prices causing buyback suspension. | 3 | Down |
| 5 |
Algorithmic / CTA safety net Trend-following systems may re-buy quickly after stabilisation, reinforcing V-shaped recoveries. |
3 | Persistent downtrend; volatility shock; liquidity gap; no stabilisation signal; multi-asset deleveraging. | 3 | Down |
| 6 |
Options dealer put walls Dealer hedging around large options positions can create mechanical buying as prices fall. |
3 | Price moves through the put wall; dealer gamma flips negative; expiry removes support; volatility spike; liquidity gap. | 2 | Flat |
| 7 |
Retail buy-the-dip behaviour Retail investors conditioned by prior recoveries treat sell-offs as buying opportunities. |
3 | Repeated failed dips; unemployment; margin calls; household cash stress; loss of faith in market recovery. | 4 | Down |
| 8 |
Earnings resilience / nominal earnings growth Inflation and pricing power can keep nominal revenues and profits rising even in weak real-growth conditions. |
4 | Margin compression; demand destruction; wage inflation; input-cost shock; recession; inability to pass through costs. | 3 | Down |
| 9 |
Fiscal / Treasury liquidity Deficit spending, Treasury cash-account changes, and bill issuance can add liquidity to private markets. |
4 | Fiscal tightening; debt-ceiling disruption; higher term premium; failed auctions; Treasury draining reserves; political backlash against deficits. | 4 | Down |
| 10 |
Global capital seeking US assets International investors favour deep, liquid US markets and dollar-denominated assets. |
4 | Dollar instability; geopolitical fragmentation; capital controls; better returns elsewhere; US governance or fiscal credibility shock. | 4 | Down |
| 11 |
AI / secular technology narrative Expected future productivity and earnings growth keeps multiples elevated, especially in mega-cap tech. |
4 | Delayed monetisation; capex disappointment; regulatory intervention; model commoditisation; energy bottlenecks; earnings miss by mega-cap AI leaders. | 4 | Down |
| 12 |
Institutional performance pressure Fund managers cannot afford to underperform rising benchmarks, creating forced participation. |
4 | Career risk flips toward capital preservation; benchmark drawdown; client redemptions; risk limits; volatility spike. | 3 | Flat |
| 13 |
Short-volatility / volatility suppression Vol-selling and volatility-targeting strategies can reinforce calm, rising markets. |
3 | Volatility spike; forced vol-covering; VaR shock; liquidity gap; correlation breakdown. | 3 | Down |
| 14 |
Margin and leverage availability Easy access to leverage allows larger risk positions across hedge funds, retail, and systematic strategies. |
3 | Higher rates; broker margin tightening; collateral losses; forced deleveraging; credit stress. | 3 | Down |
| 15 |
TINA / relative yield logic Equities remain attractive when cash and bonds are unattractive after inflation. |
4 | High real bond yields; attractive cash returns; earnings-yield compression; inflation-adjusted bond appeal; risk premium repricing. | 4 | Down |
| 16 |
Policy preference for asset-price stability Governments and central banks have incentives to avoid crashes because asset prices affect confidence, pensions, tax receipts, and consumption. |
4 | Inflation constraint; populist backlash; fiscal limits; central-bank credibility concerns; conflict between market support and currency/bond stability. | 4 | Down |
| 17 |
Index concentration in highly profitable firms Mega-cap index leaders are often cash-rich, high-margin, globally dominant companies, supporting elevated index valuations. |
4 | Mega-cap earnings disappointment; antitrust/regulation; AI capex overbuild; leadership rotation; concentration unwind; passive outflows. | 3 | Down |
| 18 |
Liquidity cycle / global liquidity Global liquidity expansion lowers discount rates, improves funding conditions, raises collateral values, and increases risk appetite. In Michael Howell’s framing, rising liquidity tends to support financial assets before it appears clearly in real-economy data. |
5 | Global liquidity contraction; central-bank balance-sheet shrinkage; Treasury/coupon issuance draining reserves; rising real yields; stronger dollar; weaker collateral values; tighter cross-border dollar funding; falling money growth; private-sector credit contraction; banking-system reserve scarcity. | 4 | Down |