While Erik Nielsen is free to provide Goldman clients with a comfortably tabulated and bullish list of last week's events from the UK countryside, a realistic appraisal of the key events over the past 168 hours really boils down to one thing - central bank intervention. Whether it is definitive SNB intervention in the Swiss franc or questionable ECB involvement in the euro, the only catalyst that prevented an all out rout of European currencies was outright and blatant market participation by sovereigns and their printers. Yet something interesting happened on the way to the stick save - decoupling. As the chart below shows, once it became openly obvious that the SNB/ECB is intervening in the market, the traditionally very tight correlation between the euro and US stocks went up in a puff of ink cartridge smoke.

In their attempt to prevent a disorderly crash in European currencies, the central banks may have killed the only surefire way to push the market higher, which was tacit manipulation of the EUR pairs. This is no longer the case, and the euro may have now fully decoupled from a direct market linkage. This is certainly bad news for the correlation desks and programs that feed off the EURXXX signal to a far greater extent than any other inputs. The question becomes whether this will in turn impair momentum factors once corr desks are forced to seek fundamental/growth opportunities once again (an event that would likely result in further material market weakness), or if momentum will become market defining as an input factor of its own. In other words, will the market go up just because it is going up? With no real drivers left any more, this could easily become the case. However, just as the slow motion market meltup showed, any sustained low volume push higher always results in a sweeping plunge sooner or later. A transition to a complete momo market could just be the gating factor to an all out market wipe out in the months ahead.