We could still see another rally here, but conditions don’t appear quite as unabashedly bullish for tech as they were. Now that yields are stabilizing, inflation is stabilizing and the large-cap/small-cap gap is starting to come back into balance, I think the market has a much better chance of reacting to larger underlying macro risks. The BoJ may be forced to abandon the idea of exiting negative interest rate policy for the time being.

While the signals have been correctly giving the green light for investors, a plethora of longer-term concerns, including commercial real estate, rising debt burdens and unsustainable consumer spending, still remain. We could see both short-term and intermediate-term signals flipping to risk-off in the early part of March and that’s when we really need to start paying attention to risk management.

The market is proving to be not so invincible after all and inflation is still its kryptonite. I don’t think we can write off the possibility that the Fed could have another hike left in them. In my opinion, the U.S. equity market is still a small-cap story. I would expect to see the first rate cut in Europe sometime in the first half, probably before the Fed decides to move. I suspect the Bank of Japan is readying itself to get involved on the yen.