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Wedging Out to Break the Downtrend 5/26/22

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Normally we don't think of wedge patterns as leading to breakouts, but this one might. Here's how it looks on the 2 hour bars of the ES 24 hour S&P fuguetures. 

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And zooming into our usual look at the hourly bars. It's a messy pattern, but clearly bullish, with higher lows and higher highs as it continuously breaks longer and longer trendlines. 

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So this appears headed for another trend break. The 5 day cycle projection looks like 4030. 

Can bears win it? Sure. There's a shot. But they need to take out 3960 to take possession. 

For the big picture: 

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The USA is not pro-life. Plain and simple. If it was, politicians would promote life affirming policies. Anti-gun, pro-universal health care. At the very least, revive the ban on assault weapons.  

The US the only place in the world where this happens regularly. What a disgusting, sick culture. 

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Last time my chart pick list had a near10% gain, the market reversed. So this time, I tightened the trailing stops to protect the gains. So far, so good. 

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Percentage based on 100% cash, no margin, no options. Boring. Sorry. 

9.4% on a 2 week average holding period? Am I allowed to project compounding?

No. 😄😄😄

Even Steven in This Week’s Swing Trade Screens

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1 hour ago, DrStool said:

The 5 day cycle projection looks like 4030. 

Now looks more like 4070. There's also a trendline there. 

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33 minutes ago, DrStool said:

Now looks more like 4070. There's also a trendline there. 

I'll see your 4070 and raise you to 4100. 

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After bad news from Target (TGT) and Walmart (WMT) last week it looked like homo vulgarus sub-species americanus was going extinct. But this week, Dollar Tree (DLTR), William Sonoma (WSM), Dollar General (DG), Nordstrom's (JWN), Dick's Sporting Goods (DKS) and Macy's (M) showed he is doing well. After hours, GAP (GPS), Abercrombie & Fitch (FTCH), Costco (COST) will round out retail for the week. I know folks here mainly trade liquidity and technicals but it is nice to take the pulse of the working class once in a while. They may not be able to afford a new house anymore, and they are losing their shirt in their 401K and crypto. Gas it killing them... but somehow they are still afloat.

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Some are. Some aren't.

Half the people are below the median. And the median won't support a family in most places.  

The Fed made this mess, and there's no goddam way out. 

 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!

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All that I can tell you is the money is flowing into, and then out of, manufacturing and construction here in MI. It's the best job market since 1969. The state has a $2bn surplus. 

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Anybody who thinks inflation is moderating, think again. PPI- Final Demand- Core Finished Consumer Goods leads. 

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And it is not suppressed by the bogus, Owner's Equivalent Rent fraud substitute for housing inflation. It just doesn't include housing. 

The Fed did this. 

 

 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!

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6 minutes ago, Jorma said:

All that I can tell you is the money is flowing into, and then out of, manufacturing and construction here in MI. It's the best job market since 1969. The state has a $2bn surplus. 

The economy is in an inflationary boom.  This is very bearish. 

Recession is bullish. The Fed has to get us to recession. The longer it takes, the worse it will be for the markets. 

 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!

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Rate hikes are irrelevant. They're the tail. Money is the dog.  Wall Street perpetually doesn't get this. The dealers do of course, but they don't want everyone else to know it. So they pretend that it's the rates that matter. Rates are the measure of monetary tightness. 13 week bill is a market rate, not manipulated. Fed must follow. 

y7tg1

 

 

 

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4 minutes ago, sandy beach said:

Bloomberg brings out sell side anal cyst every single day saying inflation is done and the Fed won't hike 50bps the next two meetings.

Well maybe QT will end in June. Why wait for trouble?

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Fed minutes yesterday said participants believed we will still have a 2.8% GDP growth year. Kyle Bass says this morning "That's just not going to happen!" A lot of folks want to pretend we can end inflation without pain. It simply isn't possible. Quantitative tightening is going to be painful if they really want to crush inflation. It was painful in the early 1980s and it'll be painful again this year unless they just give up on their inflation mandate and prop up leveraged asset prices.

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