Replies to post #87579 on Langlui's Big Board and Options Plays

[langlui]

CHART OF THE DAY: Why This Market Needs Cheap Money To Keep On Rallying
Joe Weisenthal and Kamelia Angelova | Mar. 1, 2010, 1:41 PM

The key story of the moment is the beginning of the Fed's tightening cycle, a topic on which Morgan Stanley analysts recently dedicated a major report.

In it, the company explored the historical connection between cheap money. As you would expect, the market likes it. A lot.

As the below chart shows, the S&P 500 has been nicely correlated with excess credit growth -- or the change in non-financial credit. This latest rally was no exception. When the Fed does close the spigot, watch out below.