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Who Ever Heard of a Broadening Downtrend? 3/8/21

This is a syndicated repost courtesy of Stool Pigeons Wire at Capitalstool.com. To view original, click here. Reposted with permission.

I certainly haven’t, and I’ve been watching this crap actively more or less every day for the past 55 years. The market is becoming increasingly unstable, with a series of vicious, rapid reversals, and wider swings both up and down. This has been going on since February 15.

It is consistent with my liquidity observations showing increasing stress on the Primary Dealers, leading to a self reinforcing process of falling prices, collateral calls, and more price declines, etc. As a result, the US Treasury has intervened aggressively to liquify the money markets with the hope of driving cash toward buying the long end of the curve.

It is hardly working. The bond market is testing the price lows again this morning. Meanwhile the Fed waits in the wings, hoping not to need to make an emergency move to stabilize the market before the FOMC meeting next week. Yield control and infinite QE are coming. It’s merely a matter of when.

Meanwhile, the ES fucutures have had another vicious selloff in the overnight markets. It continued through the central European open at 3 AM New York time, but reversed a bit when London opened an hour later.

That rebound is barely visible on the expanded hourly chart. What is visible is the increasing size of the intraday and very short term cycle swings. Volatility is increasing as liquidity dries up and bid-ask spreads widen.

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Click to engorge

Primary Dealers and other market makers are increasingly pulling those bids and offers as their cash dries up, and their bond fartpolios fall further under water. At the same time, other gang banksters are banging at their doors with lead pipes, demanding cash or more collateral.

The US Treasury has brought water cannon to a gang fight, trying to douse the flames in the chaos. It is spewing $50-100 billion in cash per week into the market.

It might have stopped or slowed the decline in prices, but it hasn’t reversed it. They need reversal. They need bond prices to rally, and rally hard. Otherwise, we head inexorably for an uncontrollable crash.

The Fed continues to pretend there’s nothing to see here, but a few of the more honest, and perhaps less savvy, Fedheads have begun to express susancollinsian concern.

Meanwhile, zooming in on the 30 minute bars, we see hints of what could be an upturn. That would be consistent with the daily and weekly charts, where there were signs that the market should begin to form an important low over the next couple of weeks. The question I want to answer for you is whether it will be from here, or lower.

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Time for a Stock Market Six Month Cycle Low

Infinite QE Is Coming Despite Skyrocketing Economic Growth

 

Meanwhile, here’s some free stuff I’ve written about this unfolding catastrophe.

US Treasury Injects Another $30 Billion Into Market

Treasury Announces It Will Inject ANOTHER $25 Billion For $125 Billion Weekly Total

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.

Lee Adler

I’ve been publishing The Wall Street Examiner and its predecessor since October 2000. I also publish LiquidityTrader.com, 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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