On this momentous day, the 20th Anniversary of the founding of Capitalstool.com, the progenitor of the Wall Street Examiner, and Liquidity Trader, I want to share a few thoughts with you. Please “bear” with me, and come along.
I am sometimes asked to give my opinion on the work of other analcysts and eConomists, some famous, some not. I understand this. It’s normal for people to question, and I’m flattered that anyone would care what I think about someone else’s ideas.
I prefer not to critique, or even read, the work of others. The only one I read regularly is Doug Noland. I repost his Credit Bubble Bulletin in the Wall Street Examiner. I have followed Doug for years. To me, he’s the godfather of liquidity analysis in general, and my own work in particular, although I have long since gone in a different direction than his.
In fact, my work is, to the extent that I’m aware, different from anything in the business, and therein lies its value. While I may be a bear by nature, my only aim is to help subscribers preserve and grow capital, REGARDLESS OF MARKET DIRECTION. That’s the name of the game.
While I find constant monetary policy intervention in the stock market disgusting, it is what it is. I don’t fight it. I identify the trend, stay with it, and look for hints of change that will send that trend in a different direction.
I am not married to the bearish outlook, ever, at all. I report what I see. I follow the rules. Rule Number One: Don’t fight the Fed. Rule Number Two: The trend is your friend, aka “Don’t fight the tape.” I cut my teeth in this business 55 years ago hearing the old traders I hung around with repeating those rules, ad nauseum. I fought them for a few years, until I actually went to work on Wall Street about 10 years later and learned the facts firsthand.
I report to you from that perspective in my reports. No one can or should ever doubt my opinions. When they’re not clear, by all means, ask me, and I’ll do my best to clarify. But I won’t comment on the work of others. I can’t because I don’t follow them. And I don’t want to.
The limited time I invested in reading other people’s work, simply has never been worth it. I have not found value. Early in my 20 years of publishing these websites, I did spend quite a bit of time following others’ thoughts. Over time, I learned not to do that. Time is precious. I need that time for my own work on your behalf.
I’m happy to answer questions about that work here, to the extent that I can without revealing current proprietary research which Liquidity Trader subscribers pay for. My first responsibility is to those of you who do subscribe. I’m grateful for your support. Without you, I would not be here. You are my heroes.
If you who don’t subscribe to Liquidity Trader, I humbly request that you at least try it. I am asking this now because it’s necessary and because I firmly believe that you will find value there. I give you the opportunity to discover that with 90 days risk free to first time subscribers.
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Times are tough. Relentless bull trends and rangebound markets are not good news for this business. In fact, they’re disastrous. I’ve lost a quarter of my subscriber base since April despite calling the market pretty damn well, and providing chart based swing trading ideas, both long and short, that have been consistently profitable.
So I humbly request your support now so that I can continue this work for you.
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Meanwhile, back to the business at hand here, the ES fucutures have established an uptrend since yesterday afternoon, within a broader downtrend. They’ve hit resistance at 3460 and have also almost reached the current iteration of the 5 day cycle projection, which is 3463.
Hourly cycle oscillators are in trending mode. If the ES clears 3460, it would not be clear sailing yet, however. Broader trend resistance will be coming down this morning from about 3468 here at 4:40 AM ET, to about 3466 when New York opens.
The last pivot high of 3470 also represents resistance. If cleared, the conventional measured move target would be 3535.
However, if they fail to clear the downtrend line, then the bears would still have the ball. They need to break both 3450 and 3440 to do anything with it. Otherwise it’s just a stalemate. More meat grinding. Very tough to make money day trading this.
Click to engorge.
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Short term cycles have entered down phases. But this looks like a consolidation, not a top.Here’s why and what to do about it.
The chart pick screens are spitting out a ton of interesting patterns. I’m adding 9 picks this week, 7 long and 2 short. 4 picks were stopped out last week and one which was a symbol error was also closed. That will leave 18 open picks, including 14 longs, and 4 shorts.
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Past performance doesn’t indicate future results. There’s always risk of loss. Chart picks are for informational purposes only. These reports are geared toward professional investors and experienced individual traders. Do your own due diligence before trading.
The market has the benefit of $115 billion in Fed mid-month QE MBS purchase settlements this week. That would normally be very bullish.
It’s notable that the market has not done more with it. And why not? Still massive Treasury supply along with surging corporate debt and equity issuance is absorbing most QE. There’s not enough left to power an endless bull trend in stocks.
That has been our thesis for the past month or few, and the market seems to be bearing that out. Stocks are stuck in a broad trading range and bonds are weakening.
$83 billion of the MBS settled last Thursday. That helped put $82 billion in Treasury coupon issuance to bed the next day. Whodathunk that the Fed would pump into dealer accounts almost the exact amount that the market needed to absorb the Treasury issuance!
Amazing how that works.
This week’s setup is reserved for subscribers. Risk free trial link below.
Normally this much QE every month would be wildly bullish. But the supply of financial assets has risen to meet the demand driven by QE. We’ve reached stasis – equilibrium, so to speak.
But it is fragile. Bonds are teetering on the brink of an abyss. If they go over, and bond prices fall (yields rise), the system would collapse without another round of massive Fed intervention.
So we need to pay attention. Do bonds go over the cliff? How long would it take the Fed to react if they do? And will it be enough, yet again?
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Wall Street Examiner Disclosure: Lee Adler, The Wall Street Examiner reposts third party content with the permission of the publisher. The opinions expressed in these reposts are not those of the Wall Street Examiner or Lee Adler, unless authored by me, under my byline. I curate posts here on the basis of whether they represent an interesting and logical point of view, that may or may not agree with my own views. Some of the content includes the original publisher's promotional messages. No endorsement of such content is either expressed or implied by posting the content. All items published here are matters of information and opinion, and are neither intended as, nor should you construe it as, individual investment advice. Do your own due diligence when considering the offerings of information providers, or considering any investment.