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Market in Perfect Equilibrium 11/8/22

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The S&P 500 has barely moved over the past 24 hours. Clearly, stock traders have found the perfect equilibrium price where stocks are fairly valued, and everyone is happy. We can all now close our trading screens and go do something productive with our time, secure in the knowledge that the US stock market is free and fair, enlightened and efficient. Wall Street exists to help us grow and secure our wealth, and is always looking out for our best interests. As are government policymakers. As is the Federal Reserve. 

All is well. 

And on this election day we awaken secure in the knowledge that everyone who wants to vote will be able to, everyone's vote will be counted: Congressional districts are drawn fairly: so as not to favor a particular political party, democracy will prevail, and all will accept the results of a free and fair electoral system.

Never mind that one political party bent on preserving its electoral advantages is suing to have thousands of mail ballots excluded in Pennsylvania. People should know to put a date on the outside of the envelope. 

Yes, democracy will prevail.

Or maybe it won't, and we'll all find out how it is to live in a Brave New World.

What does that have to do with the stock market? Absolutely nothing. Day to day, it's noise, and yes, the stock market jumps and swoons on the noise, but for the trend, the really big trend, only liquidity matters. 

On the other hand, in the day to day world that short term traders deal with, and on which we focus here, liquidity is not determinative. Here it's just noise and cycles. And it's difficult to distinguish between them. Sometimes the noise is pro-cyclical, and sometimes it's counter cyclical. Normally the market settles back into its daily and intraday cyclical rhythms after noise causes distortion, either with or against the direction of the current phase. If we do our homework correctly, more often than not, we should be in a position to take advantage of the noise driven moves, by fading the distortions. 

Today, the ES 24 hour S&P futures face the prospect of a 5 day cycle high and downturn, at or below significant resistance at 3830. However, the 5 day cycle projection points to 3840-45. That would break the trend resistance. If the market stays above those trendlines, and is above 3825 at the end of the day, the next up phase should extend, perhaps as far as the early November peak of 3915. But if they roll over here, then they'll probably go back to 3700. 

In either case, the setup doesn't call for a big move on or after election day. The free and fair market is in perfect equilibrium.

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Big picture stuff below. 

If you're serious about the underlying forces of supply and demand that drive the markets, join me!

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XX20 hit

$1.9 Billion Powerball Fail due to "security problems" (No Drawing on Monday)

>: The FED is also a factor in the Powerball (indirectly?)

From the WSJ

The advertised jackpot is calculated in part based on the Federal Reserve’s benchmark federal-funds rate. That is because it is the future value of the prize after being invested in government bonds over 30 years. The Federal Reserve has played a role in boosting the latest Powerball jackpot because it has been raising interest rates this year to tame inflation.

The winner can take home either $1.9 billion, paid out in 30 annual payments, or a lump sum of about $929 million. The lump sum would be cut to $585 million after federal taxes alone.

No winner has chosen the annual payments since 2014.

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