Seems the dragon has lost its wings. The 5 day cycle projection of 3445 has been hit however, so beware of dip buyers.
Zooming in on the 30 minute bars, there’s a 2-3 day cycle projection of 3410 still out there.
Then a wide angle look with the 2 hour bars – Click to view full size. A drop to 3410 would be a return to the top of the base from which the rally emerged. That’s not yet bearish in the bigger picture.
A ton of Fed cash hit the dealer accounts yesterday from the first and largest Fed’s regular monthly MBS purchase settlements. I keep you informed on that in advance at Liquidity Trader.
Bottom line. I would not bet on big follow through on this selloff today. The dippers should show, as usual. They’ll start nibbling around 10:30 if the usual patterns hold up. As for whether that’s from around 3440 or 3410, pick em. I don’t know. But if they blow out 3435, then I’d look for 3410.
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Meanwhile, the big picture.
Scheduled liquidity data has told us for a couple of months that October would be bullish. That played out like a charm in terms of the technical analysis last week. We also know that liquidity only gets more bullish this week. The technical picture confirms that outlook. We must give the bullish factors the benefit of the doubt.
My stock pick screens confirm that. I’m adding 7 picks from those screens this week, 5 long and 2 short. That will leave 13 open picks, including 11 longs, and the 2 new shorts.
Four chart picks were stopped out last week. Needless to say, all were shorts. The two older picks had nice gains, partly offset by small losses in the short side picks from last week.
The list performance improved sharply last week as the average holding time increased a bit. Gains doubled from an average 3.2% to an average of 6.4%. The average holding period last week was 20 calendar days, up from 17 days the previous week. The average holding period has ranged from 16 to 22 days, or just over two to three weeks.
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The pop in the miners looks wildly bullish on the charts.
The Fed’s balance sheet has now grown by over $2.8 trillion since March. That’s when the pandemic panic was at its extreme and the Fed went into high gear. Lately that growth has slowed drastically, to around $51 billion per month on average since July. But that is decidedly not the whole story.
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