Call it a pothole. Call it a mini flash crash. We’ve had a few of these lately, and yesterday’s was epic.
I call it, Dealers Shake the Trees. They’re low on inventory because of relentless customer buying. They needed to shake some loose before the relentless US Treasury liquidity tsunami put so much cash into the pockets of their whale customers, that it starts burning holes in their pockets.
The US Treasury is pumping ungodly amounts of cash into big investor (and dealer) accounts. $91 billion in the second half of April. Another $55 billion just this week. And yet, massive inflows of taxes in April, and now extending into mid May continue to refill its coffers. It is STILL sitting on just under a trillion bucks in cash.
This money is ON TOP of the $180 billion or so per month that the Fed pumps into dealer accounts in QE, month after month.
As a result, we get charts that look like this. All the dealers need to do to build inventory is to play off news like Yellen saying yesterday that interest rates will need to go up, of the announcement of a proposed capital gains tax increase. Get a little selling going, the bots and AI triggers, and away we go. The dealers take prices down through the stop levels, and BOOM, suddenly, it’s all gone and we ridiculous shit like this on the charts.
This will get worse. The flash crashes and rebounds will get bigger. When the turn finally comes, and we have a pretty good idea of when that will be, we will witness, and hopefully profit from, one of the greatest crashes of all time. It’s coming. But not yet.
The new 5 day cycle projection is 4215.
This is a syndicated post, which originally appeared at Stool Pigeons Wire at Capitalstool.com. View original post.
If you are a new visitor there, please register and join in! To post your observations and charts, and snide, but good-natured, comments, click here to register. Be sure to respond to the confirmation email which is sent instantly. If not in your inbox, check your spam filter.
Edited by DrStool
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.