DrStool Posted May 17, 2022 Report Share Posted May 17, 2022 They don't come any more perfect than this. An hourly close on the ES 24 hour S&P fuguetures would be bad news, bears. The 5 day cycle projection is already 4125. A breakout from this obvious base pattern implies a measured move target of 4280. All in one day? Not likely, but I would not rule out making it to the top of the green channel at 4166 by the end of regular trading in New Yak. For the big picture: Gold Miners Make Short Term Bottom, But Wait, There’s More! May 17, 2022 Buys Beat Shorts Again in This Week’s Swing Trade Screens May 16, 2022 Market Rebound Still Leaves Crash Risk Intact May 16, 2022 Dealer Positions Show It’s Not Getting Better and It Should Get Worse May 15, 2022 If you're serious about the underlying forces of supply and demand that drive the markets, join me! If you are a new visitor to the Stool, please register and join in! To post your observations and charts, 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. Link to comment Share on other sites More sharing options...
DrStool Posted May 17, 2022 Author Report Share Posted May 17, 2022 But let's say they get stuck here. If, at the end of regular trading the ES is below, say, 4060, I'd say, Pahtay ohvah! Link to comment Share on other sites More sharing options...
DrStool Posted May 17, 2022 Author Report Share Posted May 17, 2022 Strong retail sales. What a surprise. Not. https://liquiditytrader.com/index.php/2022/05/04/april-tax-collections-keep-running-red-hot-mean-that-fed-must-get-tighter/ Link to comment Share on other sites More sharing options...
Jimi Posted May 17, 2022 Report Share Posted May 17, 2022 3 hours ago, DrStool said: But let's say they get stuck here. If, at the end of regular trading the ES is below, say, 4060, I'd say, Pahtay ohvah! Yes. Let's say. Link to comment Share on other sites More sharing options...
potatohead Posted May 17, 2022 Report Share Posted May 17, 2022 Lee, Could the RRP been designed to stop t-bill rates from going negative or keep pressure on yields due to a shortage of available t-bills. Basically having RRP as another form of savings, this removes the normal market pressure of excess funds from t-bill paydowns seeking fewer and fewer t-bills (keeping rates artificially lower). Allows a t-bill market that can react or be pushed higher in yield due to the Fed’s directive to address inflation. RRP simply sucks that available money that would have otherwise made it more difficult for short term t-bill rates to rise. Thus when the Fed raises rates, like you say, they are reacting to the market which has already moved. But it is the structure of RRP that has allowed the short term markets rates to move higher by tightening money flow into the T-bill market. Link to comment Share on other sites More sharing options...
DrStool Posted May 17, 2022 Author Report Share Posted May 17, 2022 The Treasury has scheduled a mammoth $40 billion in T-bill paydowns for next Tuesday. They had been doing $15 billion on Tuesdays and $21 or $24 billion on Thursdays. This can only go on for a few more weeks as all the tax payments have been collected and processed into the Treasury's cash account, and they've started drawing it down day to day. Despite these massive injections of cash into the system, money rates continue to rise. Liquidity Trader- Money Trends How Fed and Treasury policy, Primary Dealers, real time Federal tax collections, foreign central banks, US banking system, and other factors that affect market liquidity, interact to drive the financial markets. Focus on trend direction of US bonds and stocks. Resulting market strategy and tactical ideas. 4-5 in depth reports each month. Click here to subscribe. 90 day risk free trial! Link to comment Share on other sites More sharing options...
DrStool Posted May 17, 2022 Author Report Share Posted May 17, 2022 1 hour ago, potatohead said: Lee, Could the RRP been designed to stop t-bill rates from going negative or keep pressure on yields due to a shortage of available t-bills. Basically having RRP as another form of savings, this removes the normal market pressure of excess funds from t-bill paydowns seeking fewer and fewer t-bills (keeping rates artificially lower). Allows a t-bill market that can react or be pushed higher in yield due to the Fed’s directive to address inflation. RRP simply sucks that available money that would have otherwise made it more difficult for short term t-bill rates to rise. Thus when the Fed raises rates, like you say, they are reacting to the market which has already moved. But it is the structure of RRP that has allowed the short term markets rates to move higher by tightening money flow into the T-bill market. Yep. They had to provide a place for the money from the T-bill paydowns. I believe that the Fed expanded the RRP program to allow MMFs to participate around the time the Treasury started paying down T-bills in Feb 2021. The alternative would have been for the Treasury to hold on to the cash, but it coudn't because the debt ceiling meant that they had to pay down short term debt while they continued to issue coupons. Had they held the cash it would mean that the Treasury account would be $2.7 trillion now instead of $900 billion. The Treasury and Fed worked this out together, way before they were talking about raising rates, but the theory the Fed espoused was that the RRPs would set a floor on rates. The Fed printed so much money during the pandemic, that they left themselves no way out. That money now must be extinguished to bring inflation under control. I don't think the Fed and Treasury were banking on tax revenues growing at double digits. That compounds the challenge. Link to comment Share on other sites More sharing options...
DrStool Posted May 17, 2022 Author Report Share Posted May 17, 2022 They're trying to talk the economy down. All you hear is recession, recession, recession, or soft landing etc. Meanwhile, fact is that we are still in an inflation bubble. Liquidity Trader- Money Trends How Fed and Treasury policy, Primary Dealers, real time Federal tax collections, foreign central banks, US banking system, and other factors that affect market liquidity, interact to drive the financial markets. Focus on trend direction of US bonds and stocks. Resulting market strategy and tactical ideas. 4-5 in depth reports each month. Click here to subscribe. 90 day risk free trial! Link to comment Share on other sites More sharing options...
DrStool Posted May 17, 2022 Author Report Share Posted May 17, 2022 Real retail sales were down 1% y/y. Sounds bad, till you consider March's -2.7%. Economy re-accelerated in April. Which is exactly what the tax data showed for April. But inflation is biting. Liquidity Trader- Money Trends How Fed and Treasury policy, Primary Dealers, real time Federal tax collections, foreign central banks, US banking system, and other factors that affect market liquidity, interact to drive the financial markets. Focus on trend direction of US bonds and stocks. Resulting market strategy and tactical ideas. 4-5 in depth reports each month. Click here to subscribe. 90 day risk free trial! Link to comment Share on other sites More sharing options...
DrStool Posted May 17, 2022 Author Report Share Posted May 17, 2022 5 day cycle projection holding at 4120 Link to comment Share on other sites More sharing options...
The CoinGuy Posted May 17, 2022 Report Share Posted May 17, 2022 Thank you for the well wishes Doc, I'm still waiting. I, as well as the market are playing a waiting game here. Best, TCG Link to comment Share on other sites More sharing options...
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