Pattern Still Bullish- 11/16/22

[DrStool]

The intraday pattern on the ES, 24 hour S&P futures remains bullish here approaching 7:45 AM ET. We are still firmly in the green zone with all channels still pointing upward, and none currently under threat. There's nary a red (downward) channel to be found. For that to happen, the ES would need an hourly close below 3970. By the same token, there are no unmet upside projections, so I'll assume an endless range until there's a breakout, one way or the other. For now, the range is defined as 3953 to 4043. 

Meanwhile, Jorma noted yesterday the beginnings of a drawdown in the Fed's RRP slush fund for money market funds, banks, dealers, and derivatively speaking, their assorted miscreant customers and counterparties. 

9 hours ago, Jorma said:

Finally, a blip down in the RRP totals. 

https://fred.stlouisfed.org/series/RRPONTSYD/

That drawdown looks small, but it amounts to $137 billion over the past week.

Pretty soon we'll be talking real money.  Where does most of it go? Well, this week, the US Treasury will issue a net of $77 billion in new T-bills. That's up from $40 billion in each of the two prior weeks. So that absorbs some of the cash. But not all of it. It would appear that some may be going elsewhere, which means that non-MMF holders may be in the mood for moving cash back into risk assets, such as stocks and bonds. It's helps to explain the rallies in both. 

I'll have an in depth look at the implications of this in a new Liquidity Trader report coming up in a few days. Meanwhile, the latest:

Bond Market Rally is Technically Valid but Belies the Facts

LEE ADLER 1 - LIQUIDITY TRADER- MONEY TRENDS NOVEMBER 12, 2022

Obviously, no market moves in a straight line, and this one is no exception. The technical analysis says the rally in Treasuries will have legs, albeit likely to be short. Then the underlying forces of supply and demand, with constantly more Treasury supply and limited or even diminishing demand, with a severely weakened Primary Dealer system at its core, will rear its ugly head once again.

Subscribers, click here to download the report.

Non subscribers, click here to read this report.

Despite the seeming moderation of headline inflation data, the conditions cited previously in these comments remain in effect. The speculation that the Fed might ease policy on the basis of this week’s inflation news is useless. Markets move on the fact of Fed policy change, not on the basis of Wall Street promoting such changes. Non subscribers, click here to read this report.

For perspective, here’s a look back at key points of the summaries of these Primary Dealer position updates that I’ve posted this year. We start with the most recent… and follow with a look at their current positioning, and the reasons why they present unprecedented risk for investors. Non subscribers, click here to read this report.

KNOW WHAT’S HAPPENING NOW, before the Street does, read Lee Adler’s Liquidity Trader risk free for 90 days! Act on real-time reality! 

Click the links below for moron the markets.  

• Golden Surprise November 15, 2022
• The Repeal of Rule Number One, Don’t Fight the Fed November 14, 2022
• Swing Trade Screen Picks – Few Good Longs, No Good Shorts November 14, 2022
• Bond Market Rally is Technically Valid but Belies the Facts November 12, 2022
• Bad News for the Markets – Not Just Withholding Boomed in October November 3, 2022
• Surge in Withholding Tax Collections in October Indicates Faster Jobs Growth November 2, 2022
• Bear Market Isn’t the Mirror of a Bull October 31, 2022
• We Can Now Project When Fed Will Pause, But Not Reverse October 13, 2022

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[Jorma]

I was thinking maybe RRP money was going back into T BIlls where it belongs but I see the RRP rate at 3.8 and the 30 day T bill at 3.6.

It's pretty damn funny there are $2TN dollars floating around with no place to go. So let's see. If the Fed were to pay 3.8% on $2Tn for a year that would be $76bn that would otherwise go to the Treasury. If they lowered the RRP rate to some smaller fraction of the 30 day T bill rate then if several hundred billion or a trillion went to them instead, short rates would come down. Ooops, wrong message. As a slush fund the RRP program may be a real winner but to the extent that 6 maybe 7 people in the world care, the RRP program is the proverbial  PR red headed step child. Now why nobody cares about $2Tn escapes me.

Lee, you have a history of communications with the Fed. Why don't you ask for the  list that's supposed to be public, of  RRP participants.  

[DrStool]

I think the overall counterparty list exists somewhere on the NY Fed website. But the Fed promised many moons ago to tell who's depositing the cash at each auction. 

[fxfox]

Put/Call ratio as low as in Nov/Dec 2021 at the ATH…

[fxfox]

There‘s an elephant in the room. Just saying. Not that someone complains afterwards…

[DrStool]

Who? 

[Jimi]

Here's a weird  - but also instructive - pot farm listing.

First the instructive part,:

"Interim County Permit and State Provisional License in hand. 2 Story 30'x50' building and 20'x20' building. 16,557 sq ft of outdoor cultivation, 4,992 of mixed-light cultivation, onsite nursery and processing, permitted septic."

https://www.redfin.com/CA/Blue-Lake/2499-Titlow-Hill-Rd-95525/home/115743183

That's a lot of vague words, amirite? But if you sum 16,557 + 4,992, you get 21,549.

Why do we care? It turns out that "22,000" is presently a magical pot-farm licensing threshold value:

Quote

• Medium
  • Medium outdoor – 10,001 square feet to 1 acre of canopy
  • Medium indoor – 10,001 to 22,000 square feet of canopy
  • Medium mixed-light tier 1 and 2 – 10,001 to 22,000 square feet of canopy
  •  
  • Large – By law, large size cultivation licenses cannot be issued until after January 1, 2023

 

https://cannabis.ca.gov/applicants/license-types/

Now, the weird.  Look at the price history. The day after it listed for $1.15m on February 16, 2021, it sold for asking.

Wut?

That seems very... fortuitous... as if someone "listed" it with a buyer in mind at a pre-established price.

Then, only seven months later on September 21, 2022, the property listed again , but this time for... $599,000.

So, then-buyer/now-seller decides to "eat" $551,000 on a transaction?

But that was before the October 18, 2022 price cut to $475,000.

I'm wondering whether someone settled a debt with someone else by overpaying for 90 acres of California pot farming? It just seems weird.  And now, they are selling at a loss, because it offsets gains elsewhere?

I'm a suspicious man.

Sometimes, I even get "the 'noids".....

[Jimi]

Wut elephant?

[DrStool]

Today's lack of activity seems topworthy. 

Chow. 

[sandy beach]

1 hour ago, Jimi said:

Here's a weird  - but also instructive - pot farm listing.

First the instructive part,:

"Interim County Permit and State Provisional License in hand. 2 Story 30'x50' building and 20'x20' building. 16,557 sq ft of outdoor cultivation, 4,992 of mixed-light cultivation, onsite nursery and processing, permitted septic."

https://www.redfin.com/CA/Blue-Lake/2499-Titlow-Hill-Rd-95525/home/115743183

That's a lot of vague words, amirite? But if you sum 16,557 + 4,992, you get 21,549.

Why do we care? It turns out that "22,000" is presently a magical pot-farm licensing threshold value:

https://cannabis.ca.gov/applicants/license-types/

Now, the weird.  Look at the price history. The day after it listed for $1.15m on February 16, 2021, it sold for asking.

Wut?

That seems very... fortuitous... as if someone "listed" it with a buyer in mind at a pre-established price.

Then, only seven months later on September 21, 2022, the property listed again , but this time for... $599,000.

So, then-buyer/now-seller decides to "eat" $551,000 on a transaction?

But that was before the October 18, 2022 price cut to $475,000.

I'm wondering whether someone settled a debt with someone else by overpaying for 90 acres of California pot farming? It just seems weird.  And now, they are selling at a loss, because it offsets gains elsewhere?

I'm a suspicious man.

Sometimes, I even get "the 'noids".....

Sold it to a spouse or close relative and then cashed out $500K in credit based on the new value and pocketed that. Then went to the bank and cried I need a short-sale! I bet they need bank approval to sell it at the current price and are just fishing for an offer so they can take to the bank and say - accept the short sale or I'm handing you the keys!

[Jorma]

I don't see much reason why they can't keep it up till Friday to crush the shorts.