Is it Possible That the Rally... 8/15/22

[DrStool]

  

10 hours ago, PullMyFinger said:

Lee, 

I start my question with a confession. I am both a Technical Trader and Liquidity Trader subscriber. I read TT voraciously the minute I become aware it is out. With LT, I am not as faithful of a reader--I think it is a great product and someday hope to understand it better, but for now I sometimes struggle to intuit the stuff. 

Because I don't read LT as closely as I should, I don't know how or how much you track international capital flows. Maybe it's in there plain to see and I don't get it.

But here is my question: is it possible that this rally has been fueled in significant part by international capital flows into the U.S. stock market? Could it be "smart" money getting out of Europe ahead of civil unrest and war that is likely to spread further as early as next year? And also capital moving out of China given the bank and real estate debacles that are happening? 

Dear PMF-

First of all, thanks for being a loyal subscriber. You and your fellow subscribers are the reason I do this. Without you, there would be no Liquidity Trader, Wall Street Examiner, or even, yes, The Stool Itself. 

Thanks also for your great question. 

Yes, it's possible, and yes I track the inflows of foreign capital, but only indirectly and not to the parsed detailed extent that I did some years ago. In terms of the US market, it is a waste of time to break out where the money might be coming from. Its influence is marginal relative to the Fed and domestic money.

But the impact of foreign inflows, which are almost entirely European, is reflected in total deposits, in the FCB data, and ultimately, in the Composite Liquidity Index. The last time I looked at that US stocks were the most Dover Sole they've ever been, and I reached a bullish conclusion. Maybe not bullish enough, but bullish, nevertheless.  

Stocks Are Even More “Dover Sole” Versus Liquidity

LEE ADLER 1 - LIQUIDITY TRADER- MONEY TRENDS JUNE 28, 2022

 

 

Other liquidity measures were also bullish in July.

As Good As it Gets, Before the End of Time

LEE ADLER 1 - LIQUIDITY TRADER- MONEY TRENDS JULY 18, 2022

 

They are far less so now. And the fact that we are all questioning suggests to me that the end could be nigh. I'll be working on an update later this week. 

And I'll post our usual intraday look here a little later this morning.  This weeks Technical Trader is in the hopper and will be published before 6 AM ET. 

 

[DrStool]

The 5 hour bar view of the ES, S&P 500 continuous 24 hour futures gives some perspective on this little pullback in the wee hours this morning. Even if it continues, a pullback to the May peak of 4204 would be absolutely normal in terms of this rally.  

The hourly chart shows that in a sea of green the ES has only pulled back to the bottom of its uptrend channel at 4255 as of 6 AM in NY. When the market opens at 9:30, that line will be at 4260, with 3-5 day cycle sport at 4245. 

Until those lines are broken, nothing has happened yet. In fact, any pullback that doesn't break 4204 is nothing. 

To understand and profit from the big picture check out the following.

• Yikes! August 15, 2022
• Mildly Bullish Outlook for Gold HoldsAugust 13, 2022
• Swing Trade Screens – One Bad Trade Hurt But the Rest Bailed Us Out for a Win August 8, 2022
• Fasten Your Seatbelts – Updated Cycle Projections Are Shocking August 8, 2022
• “As Good as It Gets” Was Good While It Lasted August 6, 2022
• Treasury Confirms Supply Tsunami We Expected – Will Obliterate Everything August 3, 2022
• Withholding Tax Collections Solid in July, But Here’s Why the Party is Over August 2, 2022
• The Bond Rally That Fooled The Majority And Didn’t Help Dealers July 27, 2022
• As Good As it Gets, Before the End of Time July 18, 2022
• Are the Fed and Treasury Geniuses, or Just Lucky? Part One July 12, 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. 

[DrStool]

Thanks to a mistook in processing my swing trade screens, I have to do the whole thing over. Grrrrrr. 

[PullMyFinger]

Lee, thanks for your response to my question. Much appreciated. 

[PullMyFinger]

Holy cow, Argentina just raised their interest rate to 69.5%. The interest rate is almost catching up to the inflation rate of 71%. 

[DrStool]

Buy Argentine real estate. 

[DrStool]

Swing Trade Screens – Buys Overwhelm Sells, It’s Late But One Sector Looks Ready to Roll

[The CoinGuy]

SPX: Back below 4250 will net you 3250.  Then we'll need a rest...3750 will become resistance.  The fall of 4160 will confirm...

GLD: No comment until 130.

TCG

 

[PullMyFinger]

I guess FloBot doesn't just show up on Fridays. That was one heck of a 10 bar run on the 4 minute NQ. Make me think of  MisFit Kid when I saw it.

[fxfox]

Total mania. Market doesn‘t care about anything FED guys say. Dudley said today that FED will go on with raising rates much further and that the market reads the FED wrong.

In my view there is only one solution: FED must drop an inter-meeting rate hike bomb of 2.0%. FED must shock the market.

[MisFit Kid]

27 minutes ago, fxfox said:

Total mania. Market doesn‘t care about anything FED guys say. Dudley said today that FED will go on with raising rates much further and that the market reads the FED wrong.

In my view there is only one solution: FED must drop an inter-meeting rate hike bomb of 2.0%. FED must shock the market.

If the bet/mentality is that they (Fed/CB's) ARE Complete Liars and Criminals......

what does that really say about it all.....Think I will go read some "Zen"

>: (PMF) It really does have that Flo-Bot kinda feelin'

>:: It also says QE infinity is here and now forever (until severely proven otherwise)

>::: To quote/paraphrase Bernard Black (Dylan Moran)

they (CB's) are 50% liars, 50% thieves, and 100% Ba$tards

[Mkucstars]

Indexes seem determined to touch their 200 day averages and refuse to go down until they do. Small caps are there and stagnant, waiting on s&p and nasdaq. That's where I see them failing, so not much more of this but too early to call it.

[DrStool]

Bedlam. 

[DrStool]

This thing has blown out the 5 day cycle projection by 40 points. That's ficked up. 

 

[DrStool]

There's so much green on this chart, I had to darken the channel lines.