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Pattern Still Bullish- 11/16/22

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.

The intraday pattern on the ES, 24 hour S&P futures remains bullish here approaching 7:45 AM ET. We are still firmly in the green zone with all channels still pointing upward, and none currently under threat. There’s nary a red (downward) channel to be found. For that to happen, the ES would need an hourly close below 3970. By the same token, there are no unmet upside projections, so I’ll assume an endless range until there’s a breakout, one way or the other. For now, the range is defined as 3953 to 4043.

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Meanwhile, Jorma noted yesterday the beginnings of a drawdown in the Fed’s RRP slush fund for money market funds, banks, dealers, and derivatively speaking, their assorted miscreant customers and counterparties.

  9 hours ago, Jorma said:

Finally, a blip down in the RRP totals.

https://fred.stlouisfed.org/series/RRPONTSYD/

That drawdown looks small, but it amounts to $137 billion over the past week.

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Pretty soon we’ll be talking real money.  Where does most of it go? Well, this week, the US Treasury will issue a net of $77 billion in new T-bills. That’s up from $40 billion in each of the two prior weeks. So that absorbs some of the cash. But not all of it. It would appear that some may be going elsewhere, which means that non-MMF holders may be in the mood for moving cash back into risk assets, such as stocks and bonds. It’s helps to explain the rallies in both.

I’ll have an in depth look at the implications of this in a new Liquidity Trader report coming up in a few days. Meanwhile, the latest:

Obviously, no market moves in a straight line, and this one is no exception. The technical analysis says the rally in Treasuries will have legs, albeit likely to be short. Then the underlying forces of supply and demand, with constantly more Treasury supply and limited or even diminishing demand, with a severely weakened Primary Dealer system at its core, will rear its ugly head once again.

Subscribers, click here to download the report.

Non subscribers, click here to read this report.

Despite the seeming moderation of headline inflation data, the conditions cited previously in these comments remain in effect. The speculation that the Fed might ease policy on the basis of this week’s inflation news is useless. Markets move on the fact of Fed policy change, not on the basis of Wall Street promoting such changes. Non subscribers, click here to read this report.

For perspective, here’s a look back at key points of the summaries of these Primary Dealer position updates that I’ve posted this year. We start with the most recent… and follow with a look at their current positioning, and the reasons why they present unprecedented risk for investors. Non subscribers, click here to read this report.

KNOW WHAT’S HAPPENING NOW, before the Street does, read Lee Adler’s Liquidity Trader risk free for 90 days! Act on real-time reality! 

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