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Sporadic and Weak – 5/12/23

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.

Farewell to Berlin!

And Good morning from the train to Warsaw. I expect to have a sporadic and weak internet connection while on this ride for the next 5 hours.

Have you ever noticed how the stock market imitates life and and life imitates the stock market. Yesterday it was the Wall and Checkpoing Charlie. Today it’s a sporadic, weak internet connection, about the shape of the bull move in stocks.

I noticed that of course there’s a broad consensus that the debt ceiling drama will be a catastrophe. Uh… I don’t think so. The markets will go on. It will be a non event.

Meanwhile, the US Treasury has stopped paying down T-bills. The tax windfall cash was exhausted early, most likely because the debt ceiling is having an impact.

But how then do they continue to issue new debt, both bills and coupons? Easy peasy. Pay down intragovernmental debt, IOUs to things like the Social Security Trust Fund. Not sure how long that can go on. There are some legally mandated payment due dates looming.

But they probably have ways to get around that too. Frankly, it’s too much budgetary arcana and speculation for me. And it’s mostly useless. This market isn’t going anywhere. The range is the range until it isn’t. Trade the charts.

That said, I keep wondering why my swing trade stock screens keep spitting out a plethora of buys and not many sells. Frankly, I don’t trust it, but I’m going with it and letting it ride until proven wrong. For the last few weeks, it has been a nothingburger, but at least no big losses.

Today’s intraday pattern on the ES 24 hour S&P futures shows a bit of promise for the bulls, with higher lows, and a triangle pattern. The 5 day cycle is in an up phase that should run through Monday or Tuesday. If they can clear 4148, then there’s a good chance of taking out the last minor high of 4158 and blasting off. If either of those levels hold, bears will still have a shot, but not much of one. Nothing will happen unless they take out 4098.

The 5 day cycle projection is 4165-70.

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One apparently developing consensus is that a debt ceiling crunch will be bullish for longer term Treasuries. Correct in the short run, but very, very wrong in the long run. Here’s why.

Only if the bond bulls can get the 10 year under 3.20 do they have a shot at making an extended run.

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Meanwhile, gold’s bullish big picture looks like it is set up for a pullback, but the real level to watch is 1992. Was that a good year? I don’t remember.

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