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Who Ever Heard of a Broadening Downtrend? 3/8/21

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I certainly haven't, and I've been watching this crap actively more or less every day for the past 55 years. The market is become increasingly unstable, with a series of vicious rapid reversals, and wider swings both up and down. This has been going on since February 15. 

It is consistent with my liquidity observations showing increasing stress on the Primary Dealers, leading to a self reinforcing process of falling prices, collateral calls, and more price declines, etc. As a result, the US Treasury has intervened aggressively to liquify the money markets with the hope of driving cash toward buying the long end of the curve. 

It is hardly working. The bond market is testing the price lows again this morning. Meanwhile the Fed waits in the wings, hoping not to need to make an emergency move to stabilize the market before the FOMC meeting next week. Yield control and infinite QE are coming. It's merely a matter of when. 

Meanwhile, the ES fucutures have had another vicious selloff in the overnight markets. It continued through the central European open at 3 AM New York time, but reversed a bit when London opened an hour later. 

That rebound is barely visible on the expanded hourly chart. What is visible is the increasing size of the intraday and very short term cycle swings. Volatility is increasing as liquidity dries up and bid-ask spreads widen.

tvc_dc9c9659e39c1dd551ce0f9dacfcd638.png

Primary Dealers and other market makers are increasingly pulling those bids and offers as their cash dries up, and their bond fartpolios fall further under water. At the same time, other gang banksters are banging at their doors with lead pipes, demanding more cash or collateral. The Treasury has brought water cannon to a gang fight trying to douse the chaos. It is spewing $50-100 billion in cash per week into the market. It might have stopped or slowed the decline, but it hasn't reversed it. They need reversal. They need bond prices to rally, and rally hard. Otherwise, we head inexorably for an uncontrollable crash. 

The Fed continues to pretend there's nothing to see here, but a few of the more honest, and perhaps less savvy, Fedheads have begun to express  susancollinsian concern. 

Meanwhile, zooming in on the 30 minute bars, we see hints of what could be an upturn. That would be consistent with the daily and weekly charts, where there were signs that the market should begin to form an important low over the next couple of weeks. The question I want to answer for you is whether it will be from here, or lower.

tvc_ebeace81fa50cb28afeffa384e1564da.png

 

To post your observations, and snide, but good-natured, comments, click here to register. Be sure to respond to the confirmation email which is sent instantly. If not in your inbox, check your spam filter. 

 

Time for a Stock Market Six Month Cycle Low

 

Infinite QE Is Coming Despite Skyrocketing Economic Growth

 

Meanwhile, here's some free stuff I've written about this unfolding catastrophe. 

US Treasury Injects Another $30 Billion Into Market

Treasury Announces It Will Inject ANOTHER $25 Billion For $125 Billion Weekly Total

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Meanwhile, the current move projection on the 10 year Treasury yield is 1.70. Longer projections point higher. I update that regularly in LT.

tvc_89ba3a815684bd41e420b504cab7b247.png

 

Let's look at how much leveraged bondholders have lost since last August. We can use the TLT- the 20 year Treasury ETF as a proxy. 

tvc_e5109f561040f0f87c74ba29a0986e3b.png

By my calculation, they're approaching a loss of 20%. Remember that dealers buy this shit with 90% leverage. At least.  And if you go back a little more in time, they bought a ton of it. 

tvc_64fd193cf66b49217bd4b328b8f7fe47.png 

 

The Fed is waiting on the ground, pretending to be confident that all is well, with excitement that the economy is recovering!

Infinite QE Is Coming Despite Skyrocketing Economic Growth by Lee Adler - LIQUIDITY TRADER  

 

 

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Today's Buttcoin. 

tvc_3bfb042ef981b9d7c0b1a81868db7e51.png

 

To crash, or not to crash, that is the question. 

Yes, it could consolidate here. The keys are 47,000 and 43,000. If either holds, its consolidation for the next move, which would be to 80,000. 

But if they break, it's Crash City. 

These cryptos are being touted as coming into ever wider acceptance as modes of payment. 

I call bullshit. 

Show me the money.  

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Doc, maybe you can lend your headline writing acumen for your daily opening to others that can desperately use your help. Crapvision.com headline from earlier this morning: "Futures rebound off lows following David Tepper's bullish comments." 

Comments from David Tepper can move the ES 50 points off the overnight lows now? I realize that most headline writers struggle to say something clever and pithy, but maybe some of them need another correlation/causation reminder. Although to be fair, it can be argued that my trading style frequently confuses probability and possibility. 😄 

Hopefully I live long enough that I get to read a Crapvision headline that says "Markets get flushed following Dr. Stool's comments", or some such. 

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Driving using the rear view mirror--last Friday edition. SPX 60M chart, 750 bar look back with a Fib Ribbon attached for fun. Went down and spiked below the 610 EMA a bit, retested, and held. First spike down to it also hit the Make or Break (aqua/magenta horizontal bar) time line exactly. Generally when that happens, it's an indication the MOB is going to hold. The 55, 89, 144, and 200 EMAs are flattening and threatening to turn up. We shall see, I guess.

This thing sure feels treacherous in either direction. I hate it when you can be right and lose money, and wrong and make it. Well, I guess the latter is OK. But I would feel a little dirty about it. 

Screen Shot 2021-03-08 at 7.50.11 AM.png

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I've been a little less harsh and less political on Tweeters and I've stopped losing so many followers. I'm now 64 away from 5000. Been stuck around 4800 for years as I've spewed vitriol. Now I'm Mr. Happy and I'm gaining a few each day. 

I've become a devotee of Bobby McFerrin and Pharrell Williams. 

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5 minutes ago, PullMyFinger said:

Driving using the rear view mirror--last Friday edition. SPX 60M chart, 750 bar look back with a Fib Ribbon attached for fun. Went down and spiked below the 610 EMA a bit, retested, and held. First spike down to it also hit the Make or Break (aqua/magenta horizontal bar) time line exactly. Generally when that happens, it's an indication the MOB is going to hold. The 55, 89, 144, and 200 EMAs are flattening and threatening to turn up. We shall see, I guess.

This thing sure feels treacherous in either direction. I hate it when you can be right and lose money, and wrong and make it. Well, I guess the latter is OK. But I would feel a little dirty about it. 

Screen Shot 2021-03-08 at 7.50.11 AM.png

Vey noss! 

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Spent the morning trying to find out if my paperwork had gone through for the Croatian health care system, and then to try to register on the government website for getting vaccinated. Ultimately successful at both! 

They're doing mass vaccination at the sports center here, about 2 km from me. I think I'll take a nice walk out there tomorrow morning. Maybe I'll get lucky. 

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I now know 7 people who have had the virus including 4 that have died. 3 of my closest friends have had it.  I am thankful that they survived.  

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3 minutes ago, DrStool said:

Spent the morning trying to find out if my paperwork had gone through for the Croatian health care system, and then to try to register on the government website for getting vaccinated. Ultimately successful at both! 

They're doing mass vaccination at the sports center here, about 2 km from me. I think I'll take a nice walk out there tomorrow morning. Maybe I'll get lucky. 

Took my mom to the New Baseball Stadium (Globe Life Field) to get her 1st shot.

They are doing ~3k a day and it was orderly.

May be the only time I ever step foot in that tax payer Billion dollar Barn.......

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I love baseball. But I've come to hate the sports industry. All of the owners are scum. NFL, NBA, MLB, NHL. All scum.  Bloodsucking parasites.  

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25 minutes ago, DrStool said:

I love baseball. But I've come to hate the sports industry. All of the owners are scum. NFL, NBA, MLB, NHL. All scum.  Bloodsucking parasites.  

To bring it full circle from this morning, David Tepper owns an NFL franchise. Hedge fund manager and pro sports owner. What's that worth on the bloodsucking parasite scale? 🙂

 

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