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Shallow Thoughts

Macro liquidity measures have absolutely gone through the roof, blown the lid off, set off a tsunami, as US government spending skyrockets to the moon and worlds beyond. US bank deposits aren’t just soaring, they are exploding.  These deposits are backed mostly by US Treasury paper, future claims on American taxpayers. These claims for which there’s no reasonable expectation of repayment, other than with severely depreciated dollars. Your stocks may soar, and they may still be worthless.

As the stock market began to rebound, one indicator shows the banks started buying shit like crazy. Like the South Park’s Kyle, the kid who always believed in Mr. Hankey the Christmas Poo, the banks believe in Mr. Powell.

Liquidity moves markets!

Follow the money. Find the profits! 

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Today’s trading setup is below. Follow my Deeper Thoughts, with tips on how to preserve, protect, and defend your investment and trading capital, at Liquidity Trader.

Market Trading Setup for Tuesday, April 7, 2020

Yesterday’s post.

Hourly ES S&P 500 Futures Chart

The S&P ES fucutures are up 85 points at 2730, 20 minutes before the New York open. This is near the high of the overnight session and at the top of an increasingly parabolic channel.

There’s also an obscure longer trendline that starts from February 26, that is a possible resistance level. The next resistance level would be 2900. Trend support is at 2680.

Hourly cycle oscillators are either rising or pinned to their highs. A pullback with a move to test the high or higher high coupled with a negative divergence in the indicators is likely before this reverses. The Hurstian 5 day cycle projection is now 2770-2800. ES Futures Hourly Chart

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

The daily chart gives a broader perspective. Overnight and pre market trading has been in a range of 2625 to 2745. This is midrange of the uptrend channel. The top of the channel is at 2860. The bottom of the channel is at 2525 today.

The ES has broken out of a range with a measured move target of 2825-50. The next resistance level is 2850. The 50% fibo retracement level of the crash is 2785.

S&P 500 ES Futures Chart

Rate of Change and MACD tuned to an 8 week cycle remain bullish, suggesting that the bias remanis to the upside. 

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.

S&P Cash Index Hourly Chart 

The red bar at the far right shows where the futures traded overnight. It’s between 2625 and 2745. Resistance is indicated at 2750. The market has opened at 2764 and  the next resistance level would be around 2875 if they don’t pull back below 2750 within the first hour.

The 5 day cycle oscillator was soaring at the close yesterday. There’s no sign of a top. S&P 500 Hourly Chart

Join me on the 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, April 7, 2020.” 

From coronavirus locked-in 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. 

Rebound! How to Trade It

Futures in the pre-market signal an end to the crash. Here’s what’s needed to maintain that and a few trade suggestions to take advantage.

Technical Trader subscribers, click here to download the report.

Not a subscriber? Try Lee Adler’s Technical Trader risk free for 90 days!  


Why Instability Is The New Normal

$321 Billion

That’s how much cash the Fed will pump into Primary Dealer accounts this week. Guess how much new Treasury issuance there will be over the same period. If you guessed $321 billion, you would be all but correct. It’s $328 billion.

That’s right. The Fed is buying all of the COVID19 rescue financing. It’s inventing imaginary money to pay Primary Dealers for that new supply. The Fed is printing the money to pay for the economic bailout.

And it’s not stabilizing the financial markets. Here’s why, and what it means.

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Was That A 4 Year Cycle Low?

Massive Fed intervention turned the market, although cyclicality was favorable. The 6 month cycle low was overdue. But is it something more than that?

Technical Trader subscribers, click here to download the report.

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Fed Hyperinflates Its Balance Sheet But It’s Only A Holding Action

On March 3, the Fed converted Not QE into Panic QE. Since then it has pumped $766 billion in cash into Primary Dealer accounts. At the same time the US Treasury issued “only” $147 billion in new debt. So in essence, the Fed issued $619 billion in excess cash.

Other than the hyperinflationary implications, what good has it done? What does it mean for us looking ahead.

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Already Soaring Federal Outlays are About to Explode and Boy Is That A Problem

Even before COVID-19 the trend was clear that the Treasury would need to keep borrowing money hand over fist. Now the deficit will explode. This is a hideous problem for financial markets in this condition.

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Get this report and access to past reports.  Read Lee Adler’s Liquidity Trader risk free for 90 days!

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Lee Adler

I’ve been publishing The Wall Street Examiner and its predecessor since October 2000. I also publish, and was lead analyst for Sure Money Investor, of blessed memory. I developed David Stockman's Contra Corner for Mr. Stockman. I’ve had a wide variety of finance related jobs since 1972, including a stint on Wall Street in both sales, analytical, and trading capacities. Prior to starting the Wall Street Examiner I was a commercial real estate appraiser in Florida for 15 years. I was considered an expert in the analysis of failed properties that ended up in the hands of bank REO divisions, the FDIC, and the RTC. Remember those guys? I also worked in the residential mortgage and real estate businesses in parts of the 1970s and 80s. I have been charting stocks and markets and doing analytical work since I was a teenager. I'm not some Ivory Tower academic, Wall Street guy. My perspective comes from having my boots on the ground and in the trenches, as a real estate broker, mortgage broker, trader, account rep, and analyst. I've watched most of the games these Wall Street wiseguys play from right up close. I know the drill from my 55 years of paying attention. And I'm happy to share that experience with you, right here. 

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