For the last 24 hours, the pattern on the ES, hourly S&P futures chart has been bullish. Now push comes to shove. Is it a dead cat bounce, or the onset of recovery.
I noted yesterday the information brought to our attention by Potatohead on the CME margin increase, that was the proximate cause of the selloff. When the margin man comes, selling ensues. By the way, the same thing happened a week before. The media makes up all kinds of ridiculous nonsense to explain these things when the explanation is very simple. Forced selling.
The thing about margin calls though, is that once they are met, the selling stops. That is what happened all day yesterday after the downward adjustment at the open.
The complication is the short squeeze in the bond market. It’s not clear where that’s going, and unless there’s some relief there, then the pressure on stocks will return. A margin call is a margin call. Hedge funds and dealers will liquidate what they can to meet margin calls, regardless of where they are, or in which direction.
For now, as of 7 AM ET, the rebound channel is intact, with a 2-3 day cycle projection of roughly 5340. The lower line of the uptrend channel crosses 5235 as of the NY open, and 5265 at the close. If they stay above that, it’ll be up up and away for today. Even if it breaks, I think we gotta break 5200 to get anything going on the downside again. Implications of Market Ahead of Itself
Looking at the 10 year yield, I’d say that the short squeeze in Treasuries may have reached its short term nadir yesterday at 3.68, which appears to meet the requirements of a 13 week cycle low, and a likely 6 month cycle low. Why Primary Dealers Net Short Fixed Income Is Now Bad News for Stocks August 1, 2024.
For moron the markets, see:
- Swing Trade Screen Picks – Missing 80% August 5, 2024
- Implications of Market Ahead of Itself August 5, 2024
- Tax Collections Were Worse than the Jobs Report But… August 5, 2024
- Why Primary Dealers Net Short Fixed Income Is Now Bad News for Stocks August 1, 2024
- Stars Suddenly Align for Gold August 1, 2024
- End Stage Hysteria Breaks July 24, 2024
- Picking Up Nickels in Front of a Steamroller July 9, 2024
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