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Round and Round She Goes- 9/18/23

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Where she stops, nobody knows. 

There's been no follow through on Friday's selloff this morning. 

Yet. A 2-3 day cycle projection of 4450 was hit. A 5 day cycle projection of 4425 is still out there. And there's no 5 day cycle buy signals on the hourly oscillators yet. A couple of up hours would trigger, but for now, the downside risk is still active. 4446.1 is the number that they need to break on the ES, 24 hour S&P futures to really get rolling on the downside. That would open up a massive move to the next spport level of 4440. Or fight. 

On the other hand, if they hold above 4447 this morning, and then break out above 4460, the target would then be resistance indicated around 4480-85. If they get through that the top of the range around would beckon. Shape of the 6-month Cycle Bottom


Meanwhile, watch that 10 year yield. It has edged out to a new high this morning, after absorbing a monstrous coupon settlement on Friday. There's more supply where that came from, so guess which way this is headed, regardless of what happens over the next couple of days.  Here’s Why This Stuck Market Is Not Surprising


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These days, there's no semblance of a regular repeating cycle. Can't gauge what's likely under these conditions. Although this certainly looks like a reversal of some minor short duration period cycle. 

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"After declines in June and July, the largest US banks increased their borrowing in August by 9%, or $70 billion, Federal Reserve data show. Concurrently, the Federal Home Loan Banks system, a general liquidity provider for banks, saw total debt outstanding rise to $1.249 trillion from $1.245 trillion in July.  Depositors have been leaving banks of all sizes since the Federal Reserve started raising interest rates 18 months ago, leading to the emergence of higher-yielding alternatives. The outflows peaked in March when Silicon Valley Bank and several other institutions failed. While the turmoil has abated, cash is still leaving. Bank reserves also face pressure from growth in borrowing by the US government in the form of Treasury securities.  The increase in borrowing by large banks indicates that they “are not comfortable letting reserves fall much further from current levels,” Citi strategists Shuo Li and Jason Williams say in a report.  Wall Street strategists have estimated the banking system’s aggregate lowest comfortable level of reserves is somewhere around $2.5 trillion. Scarcity has caused problems in the past, most notably in September 2019, when the Treasury increased borrowing and the Fed stopped buying as many Treasuries for its balance sheet.  Between the turmoil in March and uncertainty surrounding the Basel III reforms, banks are motivated to hold more reserves than they may actually need, and lean more on the home loan banks. "


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There you go

"FHLB advances currently account for over 45% of banks borrowing, the highest level since 2006, excluding the fourth quarter of 2022 and first quarter of 2023, according to Citi."

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