What do interest rates have to do with the stock market? Absolutely nothing!
‘-J. Granville
The crushing weight of record Treasury supply is finally taking its toll on the markets as we enter the last week of June. Net new issuance for the month:
That has begun to leave a mark over the past 10 days. The bond market has held up, largely, I suspect because of the record futures hedges held by the giant hedge funds. That will have consequences. We’re in the calm before the storm on that. We Now Know What is Driving the Rally
But it’s starting to take a toll on stock prices.
It’s Only an Intermediate Top June 25, 2023
Swing Trade Chart Picks – First Time in Months, More New Shorts Than Buys June 23, 2023
And it’s showing up this morning, as Europe sold the instability and uncertainty in Russia. I was following the cognoscenti in my Twitter feed all weekend. As usual, nobody never knows nothing about nothing, but there sure was a lot of chatter. What a waste. The self appointed geopolitical experts are the worst.
What does it have to do with the stock market? Absolutely nothing. Supply matters. All this other stuff is tangential bullshit. Although for those of us in Eastern Europe at the moment, the future looks radiant. If I am glowing green the next time you see me, no biggie.
On Friday, I leave Poland and take a ferry across the Baltic to Sweden, where I will kick off the Scandinavian leg of my summer adventure. I’m not sure that will be far enough away from the nuclear dust that will be raining down on Europe soon.
The Russians are such a lovely people, with such a lovely culture and history. They historically have always chosen the most enlightened leaders. Whenever they have a chance at representative democracy, they wisely reject it in favor of the glory of Mother Russia and empire. The Czars, Lenin, Stalin, Putin.
Whodathunk.
Like everyone, I have no clue what’s coming. But I don’t think it will be good. Stock strategists like to paraphrase one of the Rothschilds, “Buy when there’s blood in the streets even if the blood is your own.”
But first, the correction, the one that may be beginning now. The short sale picks I posted Friday are at least getting a running start.
Meanwhile, on the ES, 24 hour S&P futures, the downtrend has reached 7 days. The 5 day cycle up phase aborted early, and the down phase ideally would extend another 3 days, including today. Hourly oscillators are buried in a deeply bearish pattern. There’s no 5 day cycle projection yet. There’s a 2-3 day cycle projection of 4320-25. As of 5:30 AM ET, the futures a bouncing a bit from a key sport level at 4335, where several downtrend trendlines meet an old sport level.
The drop overnight has tentatively completed a top pattern that has a conventional measured move target of 4250. But a little more follow through on the downside is needed here to break this 4335 sport level and confirm the price objective.
Meanwhile, if a developing fear trade drives enough loose change into the Treasury market, those massive hedges that the smartest guys in the room set up are going to rip them a new one, with the potential for massive margin calls spreading across multiple asset classes. We Now Know What is Driving the Rally
Now gold investors will also have to decide whether it will be a safe haven or not. Below 1920, the answer would be “not.” Gold Gets Nearer Important Cycle Lows
For moron the markets, see:
- It’s Only an Intermediate Top June 25, 2023
- Swing Trade Chart Picks – First Time in Months, More New Shorts Than Buys June 23, 2023
- We Now Know What is Driving the Rally June 20, 2023
- Gold Gets Nearer Important Cycle Lows June 18, 2023
- The Fed’s Slush Fund is Working June 16, 2023
- Investors Breathe Sigh of Relief But D-Day Is Now June 6, 2023
- Incomprehensible, That’s What You Are June 2, 2023
- Modestly Hedged Dealers, Record Short Hedge Funds Suggest Disaster Ahead May 25, 2023
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