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Why I'm Out of Sync with This Market

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14 hours ago, DrStool said:

I feel really out of sync with this market. 

 

12 hours ago, Jimi said:

Noticed. It's strange... even unsettling.

Any thoughts on why?

(You're still the best, so not a cheap shot by me, who knows positively nothing about a damned thing.)

 

It's an illusion. I am not out of sync. The market was out of sync. 😄 

And maybe out of money too, but it's Fed MBS settlement week. It started yesterday. 

Up, up and awaaaaayyyyy. 

tvc_78e02d32168a7e57f79730e1f13246b1.png

This now an obviously bullish pattern, and the hourly oscillators are on the buy side.

There's no 5 day cycle projection yet. But on the 30 minute bars an early 2-3 day cycle projection points to 3580.

There's also a possible resistance trend there. Before that, there's possible minor resistance right here around 3565, but seems inconsequential, as does 3580.

The first real resistance is around 3585. I'm doubtful that any of these old uptrend lines mean anything. I think the odds favor going through them with minimal congestion around them. 

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In the second month of each calendar quarter the US Treasury gets together with a shadowy group called the TBAC, which stands for Treasury Borrowing Committee of the Securities Industry and Financial Markets Association.

The Treasury tells the TBAC how much money it will need to borrow to pay its bills for the rest of the current quarter and the subsequent quarter. The TBAC tells the Treasury how to schedule it. In other words, it sets out the type of issuance and the timing for the rest of the quarter and the next one.

In case you’re wondering, here are the current TBAC members. They change from time to time.

I just note that the Vice Chair is good old Brian Sack, who ran the NY Fed trading desk for several years. He was the guy who was in charge of executing the Fed’s trades with Primary Dealers in implementing QE. Now he’s making the big bucks on Wall Street as a “global eConomist.”

How would you like to be the firm that snagged him and his insider connections at the Fed? I wonder what that cost them.

But I digress.

The TBAC’s quarterly borrowing schedules are central to us because they tell us the schedule of expected new Treasury debt issuance (supply), months in advance. In the good old days, before pandemics and debt ceiling crises, that was extremely useful information to have because the Treasury rarely digressed from the TBAC schedule.

That has changed during the last couple years of the Trump Regime, because the mechanism for being able to reasonably forecast the Treasury’s borrowing needs broke down. First, they broke down because the Regime wanted to manipulate Congress by using the Federal Budget as a cudgel. Then things got worse when the pandemic came.

Last week the TBAC issued its revised estimates for the current quarter, and its first stab at Q1 2021.

Subscribers, click here to download the report.`

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These opening gaps every day have rendered my intraday charts pretty much unusable for trading. The move happens overnight, and they go into AFib all day. 

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I wasn't the only one who noticed.

MUST READ

Doug Noland’s Credit Bubble Bulletin: Well, That’s Some Weird… Stuff

by Doug Noland •  • 0 Comments

Monday’s Pfizer announcement followed pivotal elections by only a few trading sessions – an election I have posited as the most hedged individual event ever. Markets were already in a state of acute instability prior to the news, having been spurred sharply higher by the unwind of hedges and short positions.

Those positioned bearishly had suffered only deeper impairment, while derivatives markets were moving toward dislocation. Holders of puts were in liquidation mode, while those that had written out-of-the-money call options (and similar derivatives) were facing rapidly escalating exposure. In the leveraged speculating community, the more sophisticated strategies were performing poorly. In particular, long/short strategy performance was suffering the effects of a brutal short squeeze along with violent rotations. A marketplace consumed with momentum was all Crowded together in the favored technology and “stay-at-home” stocks.

The Pfizer news showered gasoline upon the bonfire. It was a melt-up dislocation and short squeeze as intense as I’ve witnessed over recent decades. Segments of the market traded as if some hedge fund and sophisticated derivatives strategies were “blowing up”. As for long/short strategies, things went from bad to cataclysmic. From Bloomberg: “…Market winners and laggards switched positions at the fastest rate on record Monday.” Attacked savagely, the persecuted bears were hit with a fateful blow. A “bear” ETF lost 11% of its value in a chaotic Monday trading session.

Sure enough, such a market outcome “statistically never could happen.” In reality, such a freakish backdrop created a high likelihood of just this kind of mayhem and market dislocation (either up or down). 

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