In short, no. You do not see armies of homeless people in Croatia like you do in US cities. Croatia is a poor country, but they seem to have ways of housing their poorest and most needy, unlike the US.
I'm not familiar with their social services beyond their health care system, which I have paid to use on occasion. The facilities are right out of the socialist era, not palatial monuments to excess like in the US. But care seems good. Medical professionals are highly trained. They have modern equipment, and at least in Zagreb, there are plenty of medical specialists to treat particular diseases.
By US standards, medical care is dirt cheap for private payers, and universal.
Apparently there are programs to assure food and housing security.
Note also that basic living costs are far lower here than in the US. In most places families can find sustenance housing for around $200 per month or less. That's not as cheap as it sounds, given salaries in Croatia are also low. Low wage workers make only $500-600 per month according to data I've looked at. The average salary is around $2100 per month.
What I would call class A 2-3 bedroom apartment would run $1000-$1200. Less desirable, not recently renovated units can be had for much less. A very nice 1 br flat in the best locations run $600-750 USD per month. Where I lived in Philly, something similar would run $2400-3000. And Philly is cheap for big US cities.
Grocery food costs 20-30% less than in US and household supplies are 50-60% less. Restaurant meals are 20% to 50% less. Public transportation is 50% less.
Gas is much more expensive than in the US. Most people who live in cities do not have a car. Most cars are minis or compacts. I have been in Europe for nearly 11 months and I've rented cars 4 times for road trips. Everything else I do here, I do on foot, or on an occasional tram or bus ride. Croatian cities are so geographically compact, I never needed to use public transit. I take an Uber to airports. That costs $15.
Prescription drugs are 80% less than in the US. Non prescription drugs, like aspirin, are far more expensive here than going to Costco and getting 500 low dose aspirin for $5. But you're still talking about a tiny fraction of a monthly budget. I get low does aspirin, 28 tablets for about $2. 20 ibuprofen would run about $5. But those are the exceptions.
Chain clothing and shoe stores cost about as much as at home. But there are street vendor markets selling nice unlabeled clothing for prices comparable to a Ross or Burlington.
American retirees on a limited income like social security alone could live decently here in Croatia for about $1200 per month including expat health insurance. You would probably want to continue to pay on your Medicare Part B, in case you ever decide to go back to the US, or want extreme medical treatment or surgery. That will cost you another $150 a month or so.
If you have $2000-2500 a month in income, you could live in a really nice apartment within a block of a beach somewhere, eat dinner in a restaurant 3-5 times per week, and have a weekend road trip every month.
A little later today, I'll be off on my travels to Slovenia, Slovakia, Poland, Czechia, and Germany. I'm saying farewell to Zadar, just as yesterday it seemed to say farewell to me!
I will pack my trusty laptop snugly in its favorite backpack, so that I grab it from time to time and work along the way, publishing Liquidity Trader, the Wall Street Examiner, and keeping our little group of friends here up to date on my thoughts about the daily market squiggles from time to time.
I don't know how much posting I will be doing today. I'll be on a bus for 6 hours, heading from Zadar to Ljubljana, Slovenia. For now, at 3:15 AM in New York here's how the hourly ES chart looks.
As in the same trend channel the market has been in since June 21. As in slight new highs. As in still with reverse head and shoulders breakout measured move targets of 4315 and 4350. The first is all but a done deal. The second looks likely too, just not this week.
There's not enough fluctuation for a 5 day cycle projection. On a 2-3 day basis we're looking at 4308. They've broken through the top of the megaphone pattern at 4295. That and 4290 look like s-port. Breakouts of rising trendlines often signal acceleration, if they're not immediately reversed into a false breakout.
A band of trendlines from 4301-05 should present resistance. If not, the next would be currently around 4315. They're all rising. Here comes the judge.
Ciao! I'll check in whenever possible!
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End Stage Rally
Now The Balance Begins To Shift
Gold Needs A Bounce
I don't believe in "pricing in." I also don't think about whether I'm a bull or a bear. I just do the math and report what it shows. The longer term projections are what they are because the liquidity balance is what it is.
Yes, to your point, there's more and more supply. I factor that into the analysis. In fact, I warned more than a year ago that stock buybacks were a two way street, that eventually the tide would turn and companies would issue more stock than they buy back.
As far as people's market sentiment, I learned a long, long time ago, that it means nothing. The consensus can be correct for a very long time. Bubbles can last indefinitely, especially when all of the world's central banks are promoting them.
I learned two rules when I was very young. Don't fight the Fed, and Don't fight the tape, aka, The trend is your friend. When supply exceeds demand, I would expect the technical indicators to turn bearish. Until then the liquidity balance and the long term trend indicators rule.
In addition to being a serious anal cyst, I like to entertain, and I need to sell. Attracting a new person to read my bombast sometimes entices them to subscribe to the service. Without subscribers, I starve and write a travel blog, and Capitalstool gets laid to rest.
It is not my intention to irritate or argue with paying customers, that's for sure. I want everybody to be happy here. I will simply continue to calls them as I sees them, and hope that people are entertained, enlightened, and that they get it. Everybody knows that I'm not always right, and please know that I know it as well.
More power to anyone who can profit on the short side of the market. They are better traders than I. I love bears. I'm a bear at heart. But I'm a technician at heart, and one of my jobs is to do my best to keep my bear friends from harm. I'm no John Hussman, or other permabears whose names I won't mention, constantly explaining why the market is wrong, day after day, week after week, month after month, year after year. It's a disservice to the people who are paying you.
The market isn't wrong. It just is. My job is to describe it, inform, enlighten, entertain, and be a friend.
I want to add a few more personal thoughts about the Ukraine situation, since it is in the news, and since we've seen some Russian anti-Biden propaganda on it.
As you know, I am not a geopolitical anal cyst. I have a personal interest in this subject. I do research, collect and review facts to the extent that they're available, and form my personal opinion. I do so in the context of having paid attention to world affairs, to some extent, since the Cuban Missile Crisis in 1962.
I also have a smattering of knowledge of 20th century history pre-dating my personal experience. Some of that history is personal. For example, my grandparents lived under Russian rule. My grandfather was a conscript in the Russian Army during the period when Russia ruled not just the Ukraine, but also Poland, until 1920. In 1900 he and other members of my family fled the Russian instigated pogroms in Poland to come to the US. They left after the death of my great grandfather, and many other Jews, in the town of Makow Mazowiecky, that same year.
What happened there that year that so many died, and my grandfather and brothers and sisters left? I don't know. There's no record.
Russia has a history of being expansionist, imperialist, racist, and homicidal, regardless of who led the government. The historical record is unclear as to the exact number, but Stalin killed between 9 million and 25 million of his countrymen. By most accounts, he murdered more people than Hitler did.
Today, Putin is promoting a rebirth of Stalinism.
Meanwhile, Putin has rebuilt the Russian military into the second most powerful in the world. Ukraine is 25th.
The whole notion that Ukraine could drive the Russian military out of Crimea and Donbass is laughably absurd. Ukraine knows it and Biden certainly knows it. So whoever is attempting to circulate that lie about Biden encouraging Ukraine to attack Russia won't get far. Ukraine would be inviting its own annihilation.
Here are a few facts. Russia's military is 5 times the size of Ukraine's in manpower. It has 10 x the number of tanks, 20 x the number of jet fighters, 5 x the artillery, and 6x the number of rockets. Putin invaded the Crimea and took it over by force. Putin is amassing more Russian troops on the border with Ukraine right now.
You don't think that Ukraine didn't resist the Russian attack and hasn't resisted its ongoing attacks for years? There's been a low grade war there ever since Putin invaded and took control of Crimea.
Ukraine has no chance of winning. They know it. Putin especially knows it, and Biden, of all people, knows it.
Ukraine is merely trying to hold the line. Donetsk has been perpetually under siege by Putin and his supporters there. I know someone who was forced to flee her home there to move in with a relative in Kiev in a one room apartment. I also know a woman whose husband, a Ukrainian military officer, was killed in the conflict. Ask these Ukrainians about how they feel about the Russians invading their homeland. Or how they felt living under Russian rule for most of their lives.
Regardless of its government, Russia's modern history has been one of repression, corruption, manipulation, and aggression against its neighbors. Putin is just one of a long line of that type of ruler.
Sadly, there are millions of outright fascists and quasi fascists all over the world willing to spew his lies and propaganda. Saddest of all is that so many "freedom loving" Americans are among their number.
The Ukrainian government knows better than anyone that it has no hope of driving out Russian forces. In addition to Russian military might, the Russian government has indigenous support in the areas of Ukraine it currently controls.
Just as the Confederacy does in the US. That doesn't make it right.
Putin invaded a sovereign nation. He has devastated Ukraine. I know the sadness and devastation that Putin has caused in Ukraine. Not just there, but anywhere in the world where he reaches his dirty fingers.
Putin took the Crimea because he wanted control of the military base on the Black Sea in Sevastapol, not because of ethnic ties. He did it for strategic purposes. Did it matter that he had lots of ethnic support in Crimea? Sure. He knew he could use this as an excuse and get away with it, because strategically no one could force him out once he moved in.
Military aggression is military aggression. Ukraine has the right to defend its sovereign territory. But it knows that if it tries to eject the Russians it will lose, and Kiev will again fall under Russian control.
That is Putin's goal, and I don't know that NATO, led by the US, has the ability or the will to stop him. I don't doubt that Putin might take this gamble. However, his calculation now must be far different than it would have been when he controlled the White House.
An attack will further destabilize the world order. The growing worldwide slide toward authoritarianism will march on.
All around the world, including the US, democracy is losing. Political freedom and the Rule of Law and Reason are in retreat. Lies, disinformation, and repression are gaining.
We saw an example of it here yesterday.
That makes me sad.
It has no impact on the stock market.
The size of the Fed's balance sheet needs to be viewed in relation to supply of and demand for financial assets. That's the issue for us. The price of financial assets.
The US Treasury creates so much supply of securities, that the market could NEVER absorb it on its own. The Fed must provide the demand. This started with the first TARP, which ironically the market was able to absorb on its own because there was so much panic that the world massively panicked INTO Treasuries. At that time, Primary Dealers were net short Treasuries.
Fast forward a dozen years and everybody is filled to the gills with long Treasuries, and leveraged to the nth degree to carry them. Therefore the Fed must print enough money to buy enough or fund enough of the Treasury supply to keep prices high and yields low. Ever since QE1, the magic number has been 85-90%.
The relentless drop in prices tells us that at that rate today, the Fed isn't creating sufficient demand to absorb enough supply to keep prices stable. Dealers and institutions are so stuffed with inventory and overleveraged that they can't take another dime of new supply. The market has been choking on this shit since last August. The Fed reduced emergency QE in July. Direct cause and effect.
In other words, the Fed is too tight at the given level of supply. And supply will double soon. We're about to see the MMT crowd face their come to Jaysus moment.
Then what will the Fed do, and when will it do it? Those are the two great questions. We answer them based on the Fed's historical behavior. The Fed is people. People behave in similar ways in similar situations.
Its a financial metric I invented.
It quantifies the inflationary gift transfer of debt value in terms of a stocks value.
Companies with high debt (long dated and fixed) have high IG numbers.
The value of the debt is inflated away and transferred as value to the shareholders.
This is currently 2% of debt per annum.
So for a ten year bond 20% of its value is going to be transferred to the shareholders.
But if inflation is 5% over the life of the bond 50% of its value gets transferred to shareholders.
So the IG number depends on four factors:
1/ The average duration and rate of the debt.
2/ The size of the debt.
3/ The inflation rate.
4/ The size of the market cap in relation to the debt.
Note banks and other lenders have negative IG numbers
As an example.
Say inflation goes to 10% over the next ten years.
You buy the stock of a company with equity value of 20 mill and debt of 100 mill - (Ten year bond)
Over the next ten years the value of the debt will be obliterated - say in real terms its 20 Mill in todays dollars in ten years time.
The total value EV of the company increases to $240 million merely because of inflation after 10 years. The companies real value does not increase.
The equity is after 10 years then worth $140 million ($240 minus the $100 debt) a 700% increase.
Or about 21% per annum compound i.e. the equity value increases at a rate greater than inflation (10%) because of the inflationary gift of $80 million from the bond holders.
The annual IG number is 11 (21-10).
The annual percentage the stock will appreciate over the inflation rate because of the inflationary gift transfer.
What's the difference between bitcoin and tesla?
What's the difference between cryto in general and stocks in general, other than those that pay dividends out of earnings?
What are dividends, you say?
Why, back in the 50s, that's why we bought stocks. To get the dividends. Nowadays, instead of paying dividends, companies buy back their stocks and that way they can pay the dividends to the executives who deserve them, rather than the ridiculous, do-nothing, stock holders. Besides, the buybacks make stocks go up. Dividends are so mid-century modern.
My superficial, uninvestigated, current working-hypothesis-since-breakfast-and-until-I-abandon-or-forget-it is that sharp declines in the cryptocurrency complex will be the bell rung at the top this cycle.
I'm not a crypto-skeptic, per se. But I have done my formal studies of money & sovereignty.
The gleeful (smug?) pile-in and emotional commitment to crypto (mainly by 20-something & 30-somethings?) is approaching "eyeball metric ca. 2000" analogous euphoridiocy(TM).
The hyper-liquidity afforded a market for something no one can see, few can cogently describe & explain, but is certain victoriously to supplant established monetary alternatives seems... overwrought.
Yes, I'm with you Greg Fokker .. Over the last 20+ yrs I've worked my way through inheritances, superannuation, insurance payouts, etc. Just as well I own the roof over my head and have no debt or dependents. I'm not blaming the way the market performs: rather it's my own weaknesses and an over optimistic view of my abilities. I have worked hard to correct these and I think I see light at the end of the tunnel. Mind you I have said this before. In the meantime I pick up recyclables and cash them in, rent out rooms in my house on a casual basis and have a very modest lifestyle. I am eligible for the age pension if it comes to the crunch but I'm hoping to stay self supporting until I shuffle off this mortal coil. 😎
I believe my grandfather was also a wealthy man around the same time - also as the result of residential real estate. Eventually thereafter, however, according to my father born in 1923, the two would stand together in breadlines. Then, when things got worse, my father and his younger brother were shipped off to a pair of aunts who lived in the country, where he cleaned the chicken coup, but was properly fed. There's also an apocryphal story of his father piling the family into a car in the night and relocating from Detroit or Cleveland to Pittsburgh, as my grandfather sought to stay one step ahead of his creditors. My father talked of a childhood without sweets, and of watching men in suits dig up and replace cobblestones as part of the era's make-work projects.
As the eldest son of an immigrant father, he was expected to take over the family business - but he went a different route and they had a falling out. As an academic, his salary along with my mom's was modest, but they saved and they were forever wise & conscientious about their money, a reaction to the deprivation of their youths. My mom's family was supported through the Depression by farmland in West Virginia to which they would make weekend recourse from Pittsburgh, land that had been in the family since at least the Civil War, when it was a stop on the Underground Railroad, then on paths that Confederate soldiers used to abandon their conscription and make their way across the Ohio River.
This time last year at 96, he was still jumping on a local bus, coming to my house, and spending the day working in our garden, which he loved, topped off with an occasional gin martini before a family dinner together. But dementia does its swift work, and now he sits in memory care, with visits from my mom within the same senior facility, but alas, none from me since March because of COVID protocols to protect the elderly. The experience of his youth echoes financially through me, as preoccupations with long-tail risk and with saving $0.30 of every dollar earned. I am doing what I can to extend that echo to my sons... all with their origin from events on this date.
I'm on a bus to Zagreb in a covid petri dish. Of course several people are not wearing masks. Several are wearing them with their noses exposed. Hopefully my two vaccinations and N95 will protect me.
THE GREAT CURVE INANITY
Current false narrative
"The FED is behind the curve on inflation"
The FED is always ahead of the curve on inflation because it creates it....................
Inflating the money supply is a deliberate and concious act of the Fed.
The FED then pretends to be behind the curve on inflation.
So it does not get blamed for the inflation.
This is blame shifting methodology 101.
THE FEDS EXERCISE IN SCHRODINGIAN EXPANSION
What is the FED doing right now??????
It is expanding the schrodingian uncertainty box where in lies its future actions.
Creating maximum confusion as to its future actions.
This of course is the oppposite to Schrodingian contraction.
Its taper talk is just that ....talk.
Synthetic Negative QE.
I think the inflation trades are still good.
Blackrock obviously agrees having just bought $6 billion in houses.
Financed I presume with a lot of low rate long dated debt to give the investment a high J Number.
The FED by its interest rate supression activites, money printing, direct bond buying and schrodingian expansion, is actually increasing the J number of this type of investment.
After all if your Blackrock why not go along for the free ride provided by the FED.
When I first opened my intraday chart today I saw this and thought, "Oh mygawd. It's over."
Knowing that I had left massive long positions in my trading account overnight, I immediately went into atrial fibrillation and started having chest pains. I chewed 6 aspirin, grabbed my English-Croatian reverse dictionary, and got ready to call 112, which is the European number to call in an emergency.
But I collected myself, saying ok, Lee, Breathe. It's 3 positions totaling less than $10,000. We can handle a loss on 10% account exposure, on a 0.63% move. Let's see, that's .000063 of my account right? I don't know, I'm not good with decimals. When I started in the business they quoted prices in eighths.
Besides, this isn't even the whole chart. So click the key to refresh the chart and relax. And in my usual calm, self contained, stoicism I said to myself, "See, asshole! You panicked for nothing! You managed your risk so that it doesn't manage you. So calm down and take a nerve pill. Idiot. Jackass. "
And then, after all that, and bleeding from the rectum from eating so many aspirin, it finally dawned in me that that was an old chart that was stuck in my browser cache.
After my refresh, I saw this.
I must admit that the current rally bears a remarkable similarity to the rally off the March 4 low. Does that mean a pullback is guaranteed at this point? No, but it doesn't matter. I trade based on my extraordinarily low level of chicken shit risk tolerance. I'll set my automatic sell orders based on trigger mechanisms that give me the best odds of getting a good price, whether it's a small loss, small gain, or maybe keeps me in as long as these 3 plays trend higher, or at least one of them.
There have even been a few shorts come up in the screens to use as hedges. I'll post today's screen momentarily below.
Now, there is a moral to this story. You may be wondering, "What is that, Lee?" OK, you probably aren't wondering, but I will tell you anyway.
If you think you are having a heart attack, and you chew 6 aspirin, always make sure that they are low dose aspirin, and not the full 325 mg. That's the lesson.
Oh, and always carry them in your purse or wallet. The time may come when you need them to save your life. It happened to me 5 years ago (almost- April 29, 2016), and I would not be here today, if not for those little aspirin tablets I chewed that day. Do it for you. Do it for your kids. Do it for me, ok? I need your business.
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Stock Market Says, Here Comes the Judge, All Rise
LEE ADLER 2 - TECHNICAL TRADER APRIL 4, 2021
Gold – Finally Some Good News
LEE ADLER 3 - GOLD TRADER APRIL 6, 2021
Stimmy Gonna Leave Its Mark… In Bond Trader’s Underwear
LEE ADLER 1 - LIQUIDITY TRADER- MONEY TRENDS APRIL 5, 2021
Holy cow that was fast once it broke above 12968 on the fifth try. If it clears 4/8 at 13125 and then 3/23 high at 13172, then I guess it's time to consider the possibility of 13281 relatively soon. Often turns back a bit the first time up or down to a 4/8 line. I'm out of my long at 13123 for a really lucky and undeserved healthy profit, so my trading week might be done. Because I'm out, I assume the odds of it going to the moon are increased substantially. 🤡
Seemed like the world was ending last week, but now here we are. The six horsemen of the NAScrapolypse are really green today. Gonna take Mrs. Finger out to lunch just in case the world is in fact ending. I would hate to face it on an empty stomach. Trade safe!
I had a market letter with them that I called Marketrac . Back then it was tres chi chi to drop the k after the c. I have no idea why. Maybe I did it because I didn't want it to look like Market Rack. Like a cheap discount store or something.
By staying home another year!
I'm hoping to ump little league in April with my 14 year old son - him behind the plate, me in the field. We did it several times together in summer 2019... being vaccinated will give me peace of mind.
Apart from travel, the thing I've missed most through this all is the wonderful innocent stupidity of youth sports. This was the year my sons were both in junior high at the same time and could play on a soccer team together... but pandemic had other plans. I will never forgive COVID depriving me watching them play on a team together.
A week ago a friend's ex husband died of Covid. Today her father died.
That's 6 people I know of who have died. My friend had it for a several weeks and was deathly ill at one point. She's recovering.
Just ahead of pandemic lockdown, we moved my parents into a senior facility nearby. My dad - 96 - was moved into memory care last May when he was found trying to wander away at 1:30am in the morning. Born into poverty of the Depression, he cleaned his great aunts' chicken coops as a 6 year old to make his keep with them when his father couldn't support my dad and his brother; then World War II. Things improved wildly thereafter.
He lived a preposterously full life. At 95, he was still catching the bus up to our place, staying fit by working in our garden, having a periodic martini before dinner. The last 10 years of his life were all on the Casino's money. I was thinking of him with my quip.
They find ways to skew the studies so that they show some benefits. I watched over my mom, saw dozens of Alzheimers patients and caregivers and families through the years, and none saw any benefit from those drugs. But doctors kept prescribing them? Why? Because they were getting paid.
30M ES. That upper red line on the downsloping action-reaction channel looks kinda important.
Doc, thanks for letting me talk to myself and clog up the board today. I promise to be on better behavior next week. 🙂
A great weak end to all!
Fact check: "True."
Started accumulating various miner shares beginning ~2001. There was no GDX or GDXJ yet, so I assembled a basket of them on my own. We bought our house from our landlady in April 2011, and March of that year was a fortuitous moment to sell out our PM stocks...
... and plough into Bay Area real estate.
It was either the most or second-most expensive property to transact in our area code in 2011. If it is the only investment decision I get right, which sometimes feels the case, it will still leave my wife & me with a cushion of financial security.
A BAD CASE OF SHOOT THE MESSENGER
And right on que Wall Street Bets is targeted for destruction by the powers that be.
The Long short funds are in a very tight spot.
Their shorts are deeply underwater.
Which they need to get out of as quickly and as painlessly as possible.
And because their survival is at stake they won't play fair.
Que Wall Street Bets destruction.
But now there vulnerrabilty has been displayed for all to see.
It will attract bigger and hungrier predators to the feast.
Instead of just the swarm of wall street bets pirahners.
Trade suspension of the most shorted stocks coming up next.
Under the cover of a SEC investigation into the nefarious short squeezers.
All backed by negative stories on short squeezes from the financial press.
If there is no market in the stocks.
Then there is no need to mark the stocks to market.
And therefore no need for any losses to be recorded.
In keeping with our new focus on modern Technical Analcystics, I present today's pattern.
It's important to keep in mind that in Moderna TA, all patterns resolve up. Only in cases where there is no pattern is there a question, but all non patterns eventually form patterns. Therefore, they too will always resolve up, eventually.
However, prior to the formation of the pattern, the bearish trader may experience hallucinations that lead to delusional thinking. Such thinking ends with the trader experiencing a squeezing sensation in the groin and nausea. Unfortunately, there is no cure. Successful trading requires that you fight the temptation to see a bearish resolution where none exists.
Today's pattern is the V. Following the ES fuctures having met and exceeded the 5 day cycle projection of 3768, the V is now forming, and will resolve as follows.
Stay tuned for further developments as they happen.
CONTAINER RATES FROM ASIA TO US RISE
The US tsunami of government spending and FED printing to cover that spending has led to a boom in imports from asia.
Hence freight rates rise.
Dollar is dumped by Asian exporters leading to dollar fall.
Rince wash repeat.
This does nothing for the US economy.
But its great for asian economies.
As I get on in years, after 30+ years of trading, sometimes almost fulltime, sometime successfully, most often not, I can say that the markets are the most fascinating of all human creations. Life would be so, so much better, if only I could have traded consistently. If I could have traded like I play pool, or do a few other things, my life would have been easier, simpler, healthier- just better.
Then imagine everyone in the whole world with two nickels to rub together is trying to do the same thing, mostly for the same reason. And yet the market somehow manages to defeat most participants - including the most sophisticated computers executing the most sophisticated algorithms programmed by the smartest people.
It's just breathtaking.
About 85% of the mass in the universe and 25% of its mass-energy is made up of dark matter. Dark energy is thought to account for 68% of the universe's energy. NASA says, "More is unknown than is known. We know how much dark energy there is because we know how it affects the universe's expansion. Other than that, it is a complete mystery."
The stock market is like that. We can see the forces driving some of it. We can understand how they work. But there are unseen forces that we don't understand. But we know they exist because we can see their effects through Technical Analysis.
We saw the effect of Dark Energy yesterday. The market is no longer perpetually extending into the outer reaches of space, driven by Fed energy.
Something is holding it back.
I think I know what it is. I've been talking about it for months. Corporate supply. For me at least, it's very difficult to measure. Some organizations track and report gross issuance soon before and after the fact, but no one that I know of tells in real time the amount of net issuance that's on the way or has just hit. It's that net new supply, not the paper being rolled over, that sucks up the market's energy.
The Fed is taking care of Treasury supply. We know that. But the market must also absorb wave after wave of supply of both net new debt and equity, that corporations are creating and selling. The old buyback fraud is dead. Corporations have seen their revenues cut. Many can't fund their self theft through their revenues any longer. So they cut the remaining pie into smaller pieces and sell it to the public. Mostly the institutional public.
They don't have the money to absorb all of it at these high prices. They must sell something else to raise the cash to buy the new stuff.
So we get days like yesterday. We see only effect. We know that dark energy is behind it. And we use TA to observe the effect, and forecast the trend.
Here's what's up for today.
The market has tried to set a bottom, but it faces a huge resistance obstacle around 3340-45. What comes next depends on what happens there. If they rollover, at most that sets up a trading range of 3405-3440. It should get worse if that zone generates only a weak bounce.
Conversely, if they get through 3440, the next resistance target would be 3460-65, with the potential for more.
Yes I had enough of thrashing about and reconstructed my trading system using weekly chart trends instead of daily. If the stock gains 50% I sell half, otherwise I wait for a sell signal (trend change) on the weekly chart. I'm only doing longs in stocks $1 per share or less and only $1k per company. I haven't been doing it for that long so not sure about profits but at least I don't have to watch the screen too much and most my decisions are made on the weekend. The rest of the time I get to do gardening, go to the gym and think about life, the universe and everything. 😏
I rarely day trade, but Friday I got the bug after a couple nice little trades on the short side earlier in the week, particularly a short of JPM which I covered Wednesday. Came in short GS Friday and covered it mid morning with a small profit. Had a few longs, and added mightily through mid day. I told you about chickening out on long TDOC, which is killing me. No conviction. I'm watching it for a BTFD moment.
I had 8 trades going into the last hour Friday. I kept trying to short a couple into the rally because I was 100% long and I couldn't tolerate that. But trying to short that was like playing whack a mole. I ended covering each short attempt for small losses. Meanwhile the longs were doing nicely. As the market started to pull back I debated whether to sell it all. I got out of 5 of them, but held 3 because I liked the daily chart patterns so much.
Over the weekend I made a list of second tier stocks that I would not recommend in the newsletter, where I stick to big caps. There were 14 longs. Could only come up with 3 shorts. One of those was a China stock that blasted off this morning, so that's off the list. I'll try to put on small positions in the other two, or one or two of those on my list from last week if this rally sticks until New York opens.
Whether I add more longs will depend on a decent BTFD setup during the day. Waiting for TDOC. 😁