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Fed’s Bond Market Tragedy Was Predictable and Predicted 9/28/22

This is a syndicated repost published with the permission of Stool Pigeons Wire at Capitalstool.com. To view original, click here. Opinions herein are not those of the Wall Street Examiner or Lee Adler. Reposting does not imply endorsement. The information presented is for educational or entertainment purposes and is not individual investment advice.

It’s not like I just made this chart. We knew what was coming.

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That’s the TLT the 20 year Treasury bond ETF, a proxy for the bond market.

I first posted this chart about a year ago methinks, but the fact is that I have been stridently, shrilly, and persistently warning about the bond market since late summer 2020.

Now, maybe we’re closer to the end than the beginning, but there’s still more pain to come.

Markets Face Catastrophe as Dealers Mitigate Too Little Too Late

The Treasury market is obviously important in itself, but when it crashes and burns the fallout is devastating for all markets. We see it in stocks, crypto, metals, energy, and ultimately we’ll see it in the economy. The markets go first. The economy follows. Which brings me to the fact that trying to divine what the markets will do by analyzing the economy is an exercise in abject futility. What a waste of time. But that’s what Wall Street and all the academic and government soothsayers do. Waste our time.

To divine the course of the market we must do only two things. Follow the Fed and follow the market. We merely need to follow the rules and there are only two. Rule Number One and Rule Number Two. Don’t fight the Fed. And don’t fight the tape, aka, the trend is your friend.

There was a bit of derision when I said at the beginning of the year that, while cash was a terrible investment, it would be far better than anything else. Still true.

That will change one day. But when? All we can do is follow the Fed and the trend. When they change, we change.

All the talk, and all the news that comes between now and the day that those two things change, are just fluff and diversion. Don’t waste your time giving any attention to what the financial media is shoveling. Pay attention to what the Fed is doing, and draw those trendlines. That’s it. That’s all.

Meanwhile, here’s today’s look at the hourly ES S&P 500 fuguetures. The 5 day cycle down phase has begun. It looks primed to get to 3550, pdq.

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However, the 2-3 day cycle projection points to “only” 3570.  Maybe if they get above 3645 they’ll get a little rally going, but it won’t amount to much.

Meanwhile, back at the big picture:

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