DrStool Posted October 4, 2022 Report Share Posted October 4, 2022 That's right. Apologies for repeating, but when liquidity is tight, and getting tighter, these buying surges rob demand from the future. And that is true whether this is the commitment of "cash on the sidelines" (rarely) or short covering (usually). Now, here we see evidence that indeed there was a rush of cash off the sidelines and into the markets yesterday. Not just for stocks, but especially for Treasuries. The Fed's RRP money market fund of money market funds by money market funds, and for money market funds, so that they shall not perish from the earth, dipped by $173 billion. That's a lot of cash to commit to the markets in one day. But wait. What's this? You say that big drops like this happen at the end of every quarter? Dressing up Macy's window for the regulators and customers, you say? Can I hear an Amen? This drop wasn't even the largest end-of-quarter drop by far. I think that it's safe to conclude that there was no movement of cash from the sidelines, except to the extent that the gang was finished showing what they wanted to show their investors when they closed the books for the quarter. So I think that we can also safely deduce that these rallies in both stocks and bonds were driven by short covering. And that's bearish. Because once the shorts have covered, who will buy my wonderful stocks? But meanwhile, the rare but not unusual megaphone pattern at the lows on the hourly chart of the ES, 24 hour S&P fuguetures continues to broaden. The last peak was at 3736. Approaching 5 AM in New Yak City, the ES is about a point shy of clearing that. If it fails, bears should get ready. But if they get through, the pattern suggests a target of 3777 at 2 PM ET. The technicals lopsidedly favor the upside for at least the pre market and AM hours in NY. The 5 day cycle projection of 3760-75 is consistent with that. Hourly cycle oscillators and momo have broken out to new highs and remain at very strong slopes. This thing looks higher. Meanwhile, back at the big picture: Swing Trade Screens – Beware! This Swing is Old October 3, 2022 Stocks Have Much At Stake Right Now October 2, 2022 Gold Reason to Hope No Reason for Optimism September 30, 2022 Markets Face Catastrophe as Dealers Mitigate Too Little Too Late September 26, 2022 Fed Speeds Into Dead Man’s Curve, More Black Tuesdays Ahead September 15, 2022 There Will Be More Black Tuesdays September 14, 2022 Withholding Tax Collections Collapsed in August But BLS Data Won’t Show It September 2, 2022 Warnings of August Liquidity Crash Come to Fruition – Here’s What to Do August 28, 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. Link to comment Share on other sites More sharing options...
DrStool Posted October 4, 2022 Author Report Share Posted October 4, 2022 Still a point and a half shy, and threatening an hourly trendline break. I would be very happy to be wrong here. I'd say that it would need to be below 3710 in NY's first hour of regular trading. Link to comment Share on other sites More sharing options...
fxfox Posted October 4, 2022 Report Share Posted October 4, 2022 This thing better reverses soon… Link to comment Share on other sites More sharing options...
DrStool Posted October 4, 2022 Author Report Share Posted October 4, 2022 1 hour bar oscillators have reached the levels where they peaked in September. We should be in the endgame here. Link to comment Share on other sites More sharing options...
DrStool Posted October 4, 2022 Author Report Share Posted October 4, 2022 18 minutes ago, fxfox said: This thing better reverses soon… Why? Link to comment Share on other sites More sharing options...
DrStool Posted October 4, 2022 Author Report Share Posted October 4, 2022 I don't tell the market what to do. I let it tell me what to do. Link to comment Share on other sites More sharing options...
DrStool Posted October 4, 2022 Author Report Share Posted October 4, 2022 Bear market rallies are vicious suckers. They take no prisoners. Shorts get squeezed out. Then the market drops to new lows. That will not change until the Fed reverses policy. As a general rule, stops on shorts should be tightened as declines age. Furthermore, the risk of shorting increases exponentially as declines age. There's no reward in shorting a decline that has persisted for 3 weeks, and is the third leg in a 6 week decline. There's nothing new, different, unusual, or particularly notable in this rally. Absolutely nothing. Link to comment Share on other sites More sharing options...
Jimbo Posted October 4, 2022 Report Share Posted October 4, 2022 THOUGHTS ON INTEL It is indeed cheap - trades for 11 times free cash flow. Now for a company that shouldnt really exist.... Carmax Stumbles along year after year without any real free cash flow. Link to comment Share on other sites More sharing options...
DrStool Posted October 4, 2022 Author Report Share Posted October 4, 2022 6 hours ago, DrStool said: The last peak was at 3736. Approaching 5 AM in New Yak City, the ES is about a point shy of clearing that. If it fails, bears should get ready. But if they get through, the pattern suggests a target of 3777 at 2 PM ET. Blew that out. 5 day cycle projection 3820. Link to comment Share on other sites More sharing options...
Jorma Posted October 4, 2022 Report Share Posted October 4, 2022 Silly season. Absolute decimation of various bearish ETF's. I would guess they have been very popular this year, thus adding more fuel for Bear market rallies. Or maybe it's just another generational bottom. Like Septembers. Sorry J Lo. Link to comment Share on other sites More sharing options...
DrStool Posted October 4, 2022 Author Report Share Posted October 4, 2022 With a minor adjustment, the megaphone looks like this. Link to comment Share on other sites More sharing options...
Jorma Posted October 4, 2022 Report Share Posted October 4, 2022 You have to climb the hill in order to dive off the cliff. Link to comment Share on other sites More sharing options...
DrStool Posted October 4, 2022 Author Report Share Posted October 4, 2022 2-3 day cycle projection 3790 - done. But 5 day cycle projection 3820-30 still out there. Link to comment Share on other sites More sharing options...
DrStool Posted October 4, 2022 Author Report Share Posted October 4, 2022 Base breakout implied target 3965. Link to comment Share on other sites More sharing options...
Jimi Posted October 4, 2022 Report Share Posted October 4, 2022 15 minutes ago, DrStool said: Base breakout implied target 3965. Wow. Manic illiquid times. Link to comment Share on other sites More sharing options...
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