It looks like a WWE smackdown as the ES, 24 hour S&P futures took a hit after hitting the top of its September downtrend channel early in the pre market this morning.
Meanwhile, Lee bides his time, gathering strength at sea. Where and when will he make landfall. And will it be short or long?
Stay tuned to the Lee Hurricane Center Channel for the latest updates on the storm’s progress as it meanders to the southwest of Europe and southeast of the US. Note that Margot is hot on Lee’s tail. Go Margot! Catch that bad boy!
KEY MESSAGES: 1. Lee is a dangerous category 5 hurricane, and further strengthening is possible. Lee's core is expected to move well north of the northern Leeward Islands, the Virgin Islands, and Puerto Rico this weekend and early next week. 2. Dangerous surf and life-threatening rip currents are likely in the northern Leeward Islands beginning later today. These conditions will spread westward and northward, affecting Puerto Rico, Hispaniola, the Turks and Caicos, the Bahamas, and Bermuda through the weekend. 3. It is way too soon to know what level of impacts, if any, Lee might have along the U.S. East Coast, Atlantic Canada, or Bermuda late next week, particularly since the hurricane is expected to slow down considerably over the southwestern Atlantic. Regardless, dangerous surf and rip currents are expected along most of the U.S. East Coast beginning Sunday. Continue to monitor updates to Lee's forecast during the next several days.
Meanwhile, back at the Stool Market Center, the hourly forecast is uncertain, as the market pulls back to test the lows. 4439 is a key spport level. If that breaks, a full metal test of the low, if not a break, or breakdown, is likely. We’ll just have to see how this unfolds. The potential for a nice symmetrical reverse head and shoulders low is already broken. So the bears have a toehold here.
On the other hand, a holding action at 4439 should lead to at least a trading range, or a weak uptrend. Time is on the bears’ side. A 5 day cycle high is ideally due this morning. A breakdown here could lead to a downdraft lasting 3-4 days. Classic BTFD Setup Or Not
Over on the fixed income front, the 10 year Treasury yield pulled back yesterday. There was some buying.
As potatohead noted yesterday, a ton of cash is being withdrawn from the Fed’s RRP slush fund. Most is going toward the purchase of the tsunami of T-bills that the Treasury is issuing, but that creates collateral, which is the basis for more buying power for stocks and bonds. Through the magic of repurchase agreements (repo or RP) T-bill issuance can become money if the market participants are willing to place their bets. It’s as if the US Treasury is issuing a form of backup QE, funded not by the Fed, but by private market participants. Beware! Jobs Really Much Weaker Than They Say
For moron the markets, see:
- Revising the Method, Better Picks September 5, 2023
- Classic BTFD Setup Or Not September 5, 2023
- Beware! Jobs Really Much Weaker Than They Say September 4, 2023
- Gold Makes Case for Synchronized Low September 2, 2023
- Last Week Was Solid, Adding Longs Now August 29, 2023
- Here’s Why This Is a No Clickbait Market for Primary Dealers August 24, 2023
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