DrStool Posted November 17, 2020 Report Share Posted November 17, 2020 Truth. I can't believe it either. But it is what it is. Another Liquidity Indicator Shows Stocks Being Dover Sole – Wait, What? 1 - LIQUIDITY TRADER NOVEMBER 17, 2020 Yesterday we looked at the overview of the CLI and the issue of new and secondary stock offerings. The CLI is still bullish. And the supply of new stock issues has not been sufficient to absorb enough of the demand to stop the advance of stock prices, although it has probably contributed to slowing the rise. Likewise, new corporate debt issuance, while massive, hasn’t been sufficient to pull enough of the demand for securities to cause a reversal of the rise in stock prices. In this Part 2 of the report, I cover the remaining interesting and important indicators that comprise the CLI. Each has its own story to tell, but they all lead to the same conclusion. Still bullish, and, unbelievably, one key component says that the stock market is Dover Sole. I find it difficult to wrap my head around that. But I won’t argue with it. If there’s one thing I’ve learned in 53 years of watching markets virtually every day, it’s not to argue with impartial indicators. They don’t care what I think should happen. They just show what is happening. So here we are. The Fed is creating enormous amounts of excess liquidity, “liquidity” being a fancy word for “money.” I use the words interchangeably. The Fed is creating that excess by pumping money directly into the markets via its POMO operations—buying bonds from Primary Dealers and paying for them by crediting the dealers’ accounts at the Fed with newly imagined money. That leads to secondary effects of increasing money in the system via credit growth, particularly increasing margin credit that results from rising securities prices. This works, and will continue to work, for as long as the players have enough confidence in the game to keep buying. This keep pushing prices higher, increasing the value of collateral. That, in turn, allows for and promotes ever more credit creation. It’s the quintessential nature of bubble finance. Circular, and more. Always more. There are those who say that this isn’t sustainable. There are also those who say that an expanding universe isn’t sustainable, that it will collapse in on itself. In a few trillion years. I’m agnostic about whether this must finally end in collapse within the foreseeable future. I assume that it will, but I sure as hell don’t know when. So I’ll just operate in the here and now, and respect the trend. We’ll always be alert for signs of change, but at the same time, never forgetting Rules Number One and Number Two. Don’t fight the Fed. The trend is your friend. Meanwhile, as Yogi said, you can observe a lot by watching. I’m confident that by always being vigilant, and open to anything, we’ll be ready just in time to take advantage of, or at least protect ourselves from, whatever is to come. Now to the indicators. The facts, figures, and outlook are reserved for subscribers. Click here to download the report. Not a subscriber yet? Get this report and access to all past and future reports risk free for 90 days! Link to comment Share on other sites More sharing options...
DrStool Posted November 17, 2020 Author Report Share Posted November 17, 2020 Meanwhile. Well, doesn't this look head and shouldery? Click to engorge. Hey, but at least no massive opening gap in NY. Or at least, not yet. I hate this bizarre pattern of massive opening gaps day after day in NY. But at least my chart picks have been on the right track since last Monday's debacle. They've recovered to a 3.3% average gain on a 5 day average holding period. 5 days! And that includes the impact of entering UAL 20% above the prior range on last Monday's absurd gap. It has recovered to a loss of just 0.4%. Not Just Liquidity, Why I Can’t Be Bearish Technically 2 - TECHNICAL TRADER NOVEMBER 16, 2020 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! Link to comment Share on other sites More sharing options...
DrStool Posted November 17, 2020 Author Report Share Posted November 17, 2020 Is there any downside potential here? 2-3 day cycle projection says only 3597. Link to comment Share on other sites More sharing options...
DrStool Posted November 17, 2020 Author Report Share Posted November 17, 2020 2-3 day cycle projection 3590 30 minute bars. Link to comment Share on other sites More sharing options...
DrStool Posted November 17, 2020 Author Report Share Posted November 17, 2020 Support is suggested at 3593 and 3586. Downtrend channel support, 3574. Link to comment Share on other sites More sharing options...
DrStool Posted November 17, 2020 Author Report Share Posted November 17, 2020 Dow 100,000 Link to comment Share on other sites More sharing options...
potatohead Posted November 17, 2020 Report Share Posted November 17, 2020 1 hour ago, DrStool said: Dow 100,000 Markets feel like the Spanish Inquisition where heresy is rooted out and punished . All non-believers must conform. Link to comment Share on other sites More sharing options...
DrStool Posted November 17, 2020 Author Report Share Posted November 17, 2020 What was the reason for the pop? Cetylpyridium chloride cures COVID? I've been swashing and gargling with that shit for a couple years. Link to comment Share on other sites More sharing options...
GregFokker Posted November 17, 2020 Report Share Posted November 17, 2020 You nailed that low like a pizza this morning. 3590. Link to comment Share on other sites More sharing options...
BurntOnce Posted November 17, 2020 Report Share Posted November 17, 2020 "vaccine-fueled rally", what will they come up with next. Link to comment Share on other sites More sharing options...
GregFokker Posted November 17, 2020 Report Share Posted November 17, 2020 As I get on in years, after 30+ years of trading, sometimes almost fulltime, sometime successfully, most often not, I can say that the markets are the most fascinating of all human creations. Life would be so, so much better, if only I could have traded consistently. If I could have traded like I play pool, or do a few other things, my life would have been easier, simpler, healthier- just better. Then imagine everyone in the whole world with two nickels to rub together is trying to do the same thing, mostly for the same reason. And yet the market somehow manages to defeat most participants - including the most sophisticated computers executing the most sophisticated algorithms programmed by the smartest people. It's just breathtaking. Link to comment Share on other sites More sharing options...
aussiebear Posted November 17, 2020 Report Share Posted November 17, 2020 Yes, I'm with you Greg Fokker .. Over the last 20+ yrs I've worked my way through inheritances, superannuation, insurance payouts, etc. Just as well I own the roof over my head and have no debt or dependents. I'm not blaming the way the market performs: rather it's my own weaknesses and an over optimistic view of my abilities. I have worked hard to correct these and I think I see light at the end of the tunnel. Mind you I have said this before. In the meantime I pick up recyclables and cash them in, rent out rooms in my house on a casual basis and have a very modest lifestyle. I am eligible for the age pension if it comes to the crunch but I'm hoping to stay self supporting until I shuffle off this mortal coil. 😎 Link to comment Share on other sites More sharing options...
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