Yesterday surprised me. I did not expect a big selloff, obviously. I saw nothing in my work to suggest one. It’s not that that never happens. As the great trading coach Joe Kuharich said, “It’s rare but not unusual.”
The balance between QE and Treasury supply will begin to shift in July. The underlying bid it has provided for stocks and Treasuries will begin to fade.
This report tells why, and what to look for in the data and the markets. GO TO THE POST
Cue audience laughter. 😄
Normally when it does happen, it’s one of two things. Either I missed something obvious in either my liquidity analysis, or my technical analysis. Or something happened that wouldn’t have shown up. That something would be something like a big player being forced into a big liquidation. We could make something up and give it a name, like oh… say… the Archegos Factor.
I think that may have been what yesterday was about. If so the news will out. However, if this was the case, I think it was a hedge fund, or private equity, or the like, and not a Primary Dealer. If it had been a dealer, Treasuries would have sold off because that’s where all the excess leverage in dealer inventory is. And they didn’t. They rallied. So that suggests that if this was a fund liquidating, they may have been short Treasuries and long stocks.
Anyway, this is all useless speculation.
The thing is, there’s never just one cockroach. Maybe this is the beginning of the end.
It was definitely a Murphy’s Law day for me. I was running late, so did not have a chance to post, or even look at my stock screen data. Turns out the bears had won the screen game based on Monday’s action. There were 22 sell signals to 8 buy signals. That would have told me that we might be in for a little pullback, but not extended carnage.
Today’s numbers are likely to tell a different story. I’ve run the screens, and will post the data a little later after I get a Liquidity Trader PONTs report update out to my very patient and wonderful subscribers, who somehow put up with my constant tardiness. Obviously it’s because I’m so cuddly and lovable.
As for today’s hourly ES chart, here tis. They found support at 4110 yesterday. The rebound will run into multiple lines of resistance between 4130 and 4142 over the next few hours before NY opens. It’s now 4:15 AM in NY.
A rollover here would make it interesting for bears. If 4110 breaks down later today, then we get a bounce from 4100 that fizzles, look out below. On the other hand, if they can push through 4130, then this was just a tree shaking exercise by the dealers. They needed more inventory.
I suspect that neither side may get satisfaction, with the market settling into a 4110-4140 trading range for a few days.
Meanwhile, I guess they’re still working on the pilings needed for the foundation.
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