Editor’s Note: Earlier this week, I joined Jonathan Rose for a special event where we shared some of our biggest ideas and saw firsthand how his trading system tracks Wall Street’s hidden moves. It was an incredible session – and if you missed it, you can still catch the replay for a limited time.
But first, I wanted to give Jonathan the floor to share more of his perspective on what’s driving this market right now. Here he is on the Fed’s latest pivot…
For months, the headlines have been trying to take this market down.
First it was surging bond yields and “higher for longer” interest rates. Toss in weak earnings from some of the big names, geopolitical flare-ups, and talk of a looming recession.
And just last week came the fears around AI froth – overstretched valuations, overbought tech stocks, traders too euphoric. If you just looked at the mainstream media, you’d expect this market to be on its knees.
But every time we’ve seen a pullback this year – whether it’s been a 3% four-day slide, or April’s “Tariff Tantrum” 20% correction – this market has come roaring back to set new highs.
The market is sending a message – and it’s not subtle: The foundation is stronger than the headlines want us to believe.
And almost all of this happened before the Federal Reserve made one of its most important announcements in years.
On October 29, the Fed confirmed what some of us had been suspecting for months: Quantitative tightening is ending.
As of December 1, the Fed will stop shrinking its balance sheet. They’ll begin reinvesting maturing Treasuries and mortgage-backed securities, reversing the slow liquidity (i.e., cash) drain that’s been weighing on the system since 2022.
That means billions of dollars will start flowing back into U.S. stocks as the Fed shifts from draining money out of the system to putting it back in. More liquidity typically gives investors more confidence – and that can lift stock prices across the board.
This isn’t some minor policy shift. This is a full-blown liquidity pivot that removes what may have been the single biggest headwind markets have faced since this tightening cycle began.
For the past three years, the market has been climbing with a weight on its back. Now that weight is coming off.
And with rate cuts likely still ahead, these conditions are setting the stage for the next leg higher in growth assets like tech and crypto. If the market has been this resilient without a tailwind, just imagine what happens when it finally has one.
How QT Drained Liquidity – and Kept Markets on a Leash
Let’s step back.
In 2022, the Fed started allowing billions of dollars in Treasury and mortgage bonds to mature without replacement every month. That’s quantitative tightening (QT), and it’s the opposite of the massive money-printing – quantitative easing (QE) – we saw during the pandemic.
QT works by slowly shrinking the Fed’s balance sheet, draining liquidity from the financial system. It makes credit tighter, makes borrowing more expensive for businesses and consumers, and reduces the flow of cash into stocks and other assets. While it’s less dramatic than hiking interest rates, it adds pressure behind the scenes, tightening funding conditions and weighing on valuations.
For the past three years, QT has been a steady drag on financial markets. Not enough to break the bull market entirely, but just enough to keep higher-risk assets on a leash. Roughly $95 billion per month was being pulled out of the system; that’s about $1.4 trillion since quantitative tightening began.
Now that ends. On December 1, those maturing securities will be reinvested instead of allowed to roll off. That means the Fed will no longer be vacuuming reserves out of the system. They’ll be putting money back in.
No, it’s not quantitative easing… yet. But it’s close enough to matter. Because whether you call it “neutral” or “accommodative,” the end result is the same: more dollars sloshing through the pipes.
When liquidity expands, higher-risk investments rise. It’s that simple.
A Familiar Setup, But With Higher Stakes for Growth Stocks
The last time the Fed paused QT was 2019 – right before markets ripped higher into one of the most powerful bull runs we’ve seen. The setup now is eerily similar: slowing growth headlines, cautious Fed rhetoric, and a market bracing for cuts that “aren’t guaranteed.”
Sound familiar?
Back then, QT stopped… and within months, tech stocks and even more speculative corners of the market were on fire.
This pivot feels even bigger.
Back in 2019, the Fed’s balance sheet had never been this large, and rates weren’t this high.
Today, we’re coming off both the steepest tightening cycle and the most aggressive balance-sheet runoff in modern history.
Reversing that pressure – even slightly – will send shockwaves through short-term lending markets like the repo desks that keep Wall Street’s plumbing running. And it heightens the appetite for equity and credit risk.
That’s why I’m saying it loud and clear:
Bullish. Bullish. Bullish.
Why Fed Liquidity Supercharges Tech and AI Stocks
Let’s take a look at the Nasdaq-100…
Tech has been unstoppable. For five years, that relative-strength line of the Invesco QQQ Trust (QQQ), which tracks the Nasdaq-100, versus the S&P 500 has gone almost straight up – and as of October, it hit a five-year high.
This isn’t just about “AI hype.” It’s about structural leadership.
When liquidity floods the system, the most innovative, asset-light, cash-flow-rich names tend to outperform. Big Tech has become the ultimate liquidity sink – where global capital flows when real yields fall and cash needs a home.
So, if the Fed is about to loosen financial conditions, you can bet tech will be the first to react.
AI, quantum computing, uranium, advanced materials – these are all long-duration, high-growth sectors that live and die by the cost of capital. Lower rates and a fatter Fed balance sheet make those future cash flows more valuable.
That’s why I keep saying: This is the moment to stay long innovation.
Positioning for the Liquidity Wave Hitting Markets
When the Fed adds liquidity, correlations break down. The strong get stronger.
Small-caps might bounce, but the real leadership remains in bigger tech – specifically AI, data-center infrastructure, and the semiconductor complex. That’s why the QQQ continues to crush the Dow Jones Industrial Average and the Russell 2000 small-cap index.
But liquidity doesn’t mean we won’t see volatility. We’ll see plenty of volatility.
However, the kind of trading I do thrives off volatility.
That’s where professional traders make their living – by combining volatility with the leverage of option trades and tracking where big institutional money is moving to help turn small market moves into outsized returns.
When I say I’m bullish, that doesn’t mean “buy and forget.” It means I’m positioning my members to capture market moves while keeping our risk low.
That’s the difference between gambling and trading.
If you haven’t seen The Profit Surge Event yet, you’re missing the most important conversation I’ve ever had about trading. In that session, I reveal the simple tweak that’s helped everyday traders turn small, focused bets into extraordinary gains.
This exact approach is what allowed my members to collect returns of 108% on Comstock Resources Inc. (CRK) and 99% on Grindr Inc. (GRND) just last week.
You’ll also hear from Louis Navellier, Eric Fry, and Luke Lango as we discuss how this strategy can amplify their top stock ideas by 500% or more.
It’s the blueprint my community is using right now to trade smarter, faster, and more creatively. You can catch the entire presentation – and get access to a report detailing my highest-conviction trading setups right now – by watching the full replay here… but only until midnight tomorrow.
Bottom Line
The Fed is ending its three-year cash drain. QT is over. Rates are headed lower. That combination is pure rocket fuel for higher-risk assets – especially tech.
There will be noise. There will be corrections. But the overall direction of this liquidity-fueled shift is up.
Trade small. Trade smart. Stay creative.
