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Mygawd, The Market Is Closer to Dover Sole than Overbought 11/16/20

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How could that be? I'm putting the finishing touches on a report that explains it, to be posted in Liquidity Trader in two parts. The first will be up early this morning, and the second a bit later this afternoon. 

Meanwhile, back at the daily funhouse, unless something changes radically over the next 6 hours or so, New York will again open on a massive gap. The crazy has become normal. All of the moves take place over night, and then during the day New York spends the day shimmying, shaking and quaking. 

Meanwhile the hourly oscillators are on the sell side following sideways churning since last night's pop open in Asia. On the other hand there's a 5 day cycle projection of 3630-3640 still operative. One old trendline extension suggests possible resistance at 3640. So for now, I'd look for that as a target. Additional resistance targets are at 3650 and 3660. 

Trend support is suggested at 3605. Bears need to break that, and also 3600 and 3585 to have a chance at a significant reversal. 

Click to enlarge..
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Cyclically, there’s no reason to get bearish here. Cycles of up to 6 months duration remain in gear to the upside. A 4 week cycle high is due now, but it won’t matter if the 6-8 week cycle is dominant. Here are the price targets and theoretical timing of these expected moves.

Technical Trader subscribers, click here to download the report.

Not a subscriber? Try Lee Adler’s Technical Trader risk free for 90 days!  

 

 

Are You Kidding Me?

Can this be right? Did the stock market become Dover Sole in mid October versus Composite Liquidity. This chart said that it did. And even after this huge 2 week rally, it’s still much closer to Dover Sole than overbought. The S&P 500 is still near the bottom of the liquidity band.

It’s very similar to a look it had in July 2011. That preceded 4 years of a relentless, virtually unbroken bullish string.

What should cause us to expect change?

The facts, figures, and outlook are reserved for subscribers. Click here to download the report.

This is Part 1 of a 2 part report. Part 2 will be published later today.

Not a subscriber yet?

Get this report and access to all past and future reports risk free for 90 days! 

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The Federal Reserve's next Federal Open Market Committee meeting is mid-Dec. Standard Chartered anal cysts say the Fed could ease policy again prior to then.

Due to 
  • the huge surge in COVID-19 infections 
  • the stumbling over further stimulus in a now 'lame duck' Congress
Stan Chart anal cysts say if the Fed considers it necessary to ease its likely to do so in coming weeks, ahead of the FOMC meeting. Not to wait until the meeting.
 
Likely policy action includes:
  • increase monthly US Treasury purchases by about 50% (i.e. to USD 120bn / mth)
  • could add measures targeted at encouraging credit provision to business

https://www.forexlive.com/centralbank/!/fomc-meet-december-15-16-some-fed-watchers-say-the-bank-could-ease-further-20201114

I hadn't even thought of that. It would take care of pesky rising long end.  Which would be the real reason not those silly bullet points about Covid and no stimulus which make no sense.

 

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The Fed will only increase QE in response to an increase in Treasury issuance. 

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.`

KNOW WHAT’S HAPPENING NOW, before the Street does, read Lee Adler’s Liquidity Trader risk free for 90 days!

Act on real-time reality!

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I assume the PD's are still sitting on very large holdings of Treasury coupons. Why?  By choice?  Then too why isn't the market clamoring for what is still the best paper around.  Why would anyone buy Euro soverign debt at zero or below when you can get Treasuries with a positive stated return?

 

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3 minutes ago, Jorma said:

Dr Stool.  Do you ever have nightmares that when you finally find a cure for bearishness the bottom falls out?

I just report what I see. I don't care what it is. But I can't trade these gap openings day after day. I just sit and suck my thumb. 

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