After a swift and serious selloff, stocks have managed to rise on Thursday's session with help from the soothing words of St. Louis Federal Reserve President James Bullard. And after dropping just shy of 10 percent from high to low, the S&P 500 looks to have finally bottomed out, some traders say.
"Whether the complete correction is over I'm not positive yet, but there looks to be some relative calm," said Jim Iuorio of TJM Institutional Services. "I think the next leg is going to be higher."
Iuorio is focusing on the comments Bullard made Thursday morning on Bloomberg TV, where he discussed the quantitative easing program, which the Fed is currently winding down.
He said, "We have to make sure that inflation expectations remain near our target. And for that reason, I think a reasonable response by the Fed in this situation would be to … pause on the taper at this juncture, and wait until we see how the data shakes out in December."
Bullard's comments come two days after those of San Francisco Fed President John Williams (who, like Bullard, is a non-voting member of the Fed Open Market Committee). Williams told Reuters "If we get a sustained, disinflationary forecast… then I think moving back to additional asset purchases in a situation like that should be something we seriously consider."
The conclusion drawn by many is that, in the words of Rhino Trading Partners chief strategist Michael Block, "the stage is set to put QE back into place, thanks to Bullard's comments today. It's very dovish and very bullish for risky assets and we will treat it accordingly."