FxFox over at Capitalstool.com asked where all that Fed Play Dough is going.
Well, it seems to me that the margin man keeps calling and taking it as financial asset collateral values collapse.
Trust me, commercial real estate is next, and then housing, but they’re another story, tangential to this one.
I told Lindsay Williams in our podcast over a week ago that there were dead bodies. They just hadn’t floated to the surface yet. I also said that the dead had taken their banks with them.
I now think that the entire system is not just illiquid but insolvent. There’s nothing the Fed can do. The Fed has become the defacto banking system. The dealers and other banks are just branches of the Fed. The banks are wiped out. What has happened over the past two weeks is worse than any phony ginned up stress tests the Fed dreamed up for them.
As far as I can tell the only way through this is for the collapse to run its course. That will lead to depression. With all this massive money printing, it could be a hyperinflationary depression. If I’m right, gold and commodities will turn around first.
If they don’t turn, then it will be a deflationary depression, with the central bank ending up owning everything, with very few productive assets, just a pile of worthless financialized crap.
Market Trading Setup for Tuesday, March 17, 2020
Hourly ES S&P 500 Futures Chart
The futures have formed a triangle pattern overnight. Triangle breakouts are usually explosive. But everything is explosive lately so there’s no news here. The lower limit is around 2375 in the opening hour. If that breaks we should see 2300 very quickly. If it holds then back we go to 2500. Then if they clear that, we look for 2600, and so on.
This could go either way. Momentum and cycle indicators are flat. But the trend is you friend until proven otherwise.
Reminder- I’m only talking patterns for a day here. This is not the big picture. If you want that story, you must subscribe. Risk free trial and all.
S&P Futures Daily Chart
On the daily chart, we have a little spinning top candlestick, perfectly balanced on a support line. It’s also right on the centerline of the sharpest crash channel. It’s still below the lower line of the larger crash channel from the market peak.
This is still grossly bearish until these channels are broken. If this starts to the downside, the target would be the lower channel line around 2315 today. It could stretch that. I don’t even want to think what might happens if they seperate from that.
Again, this is for the perspective of one day only. The purpose of these reports is not to divine the longer term. If you want longer horizons, join me at Liquidity Trader.
Department of Wash, Rinse Repeat – There’s no oversold parameter in a crash. Positive divergences are almost certainly necessary to form a good swing low. There are no positive divergences on the daily chart yet.
S&P Cash Index Hourly Chart
The red bar at the far right shows where the futures have been trading. The SPX needs to be above 2475 at 10 AM to break out of the 1 day downtrend. But then it would face resistance at 2600.
On the downside, there’s a support cluster around 2375 and every 25 points or so down to 2250. Below that is a support vacuum to around 2125 at the end of the day.
Join me on the Capitalstool.com message board today and I will update you there occasionally during the day. Feel free to join the “fun.”
“And that’s the way it is, Tuesday, March 17, 2020.”
From Zagreb, Croatia, good morning!
Where have you gone Walter Cronkite? Our nation turns its lonely eyes to you.
Meanwhile, here are the latest reports from Liquidity Trader.
Last week’s indications that gold was going higher failed miserably. A collapsing credit bubble takes no prisoners. When the margin man comes to your door, you sell whatever you can. Gold was sold. It was no insurance policy. There was significant technical damage. We look at where gold and the mining stocks are headed next.
Subscribers, click here to download report.
Try Lee Adler’s Gold and Mining Stock Trader risk free for 90 days!
The SPX has broken out of its original crash channel to the downside. It’s in a new channel with a slope of -46 points per day. Long term signals are already extremely negative, and are on the verge of turning catastrophic, cataclysmic, and apocalyptic.
I’ve run out of adjectives.
Technical Trader subscribers, click here to download the report.
Not a subscriber? Try Lee Adler’s Technical Trader risk free for 90 days!First time subscribers only.
With no prior announcement or clue, the Fed bought $37 billion in Treasury coupons from Primary Dealers on Friday. To pay for them it deposited $37 billion into dealer accounts at the Fed.
It was the largest single day POMO (Permanent Open Market Operation) purchase since the days of TARP and QE 1 in 2009.
It came without warning. I was so glued to the intraday live charts on Friday, I wasn’t even aware that the Fed had taken this emergency action until after the close.
We sure as hell saw the result. But this is only the beginning of this story.
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And now, a note from the church rector:
Good Morning!
Twitter has banned me for using bad words (moi? 😱) 😄. I had tweeted an emotional criticism of a so-called financial news outlet of Newscorp/Dow Jones.
Banning me for throwing a few cuss words at Rupert Murdoch’s propaganda minions is like banning David for slinging a rock at Goliath. Only I didn’t kill anybody. Besides, they’re impervious to rocks or reason.
But alas, Twitter’s playground monitors stomped their feet and pouted, “Take it back, or we won’t let you play!”
But they also said that, instead of taking it back, I could formally appeal.
I’ll never retract the truth, so I took the second option. My appeal went like this, in the immortal words so often heard from a street kid from Philly: “Stick it up your ass!”
Good bye Twitter. I never believed in you anyway.
So if you like this post or anything else you see on Wall Street Examiner, please give it a link on your favorite financial social media site, with my thanks! And please join us at our own little social media playground, Capitalstool.com for my occasional intraday blurtouts. You can add your very own blurts too. – Lee
