Going through my stock screens this morning, I was shocked at how bullish the output was. Chart after chart. Sells were few and far between.
I think we’re going to have to grit our teeth for awhile. But this isn’t a surprise. We knew for a couple months that the liquidity outlook for October was very bullish.
Last night, I left you with the 5 day cycle projection on the ES fucutures of 3485. Overnight they got to 3459. Now the 5 day cycle projection is 3500. Lordy, lordy.
As I write at 4:35 AM ET, they’re sitting on an uptrend channel line at 3449. As of 9:30 AM the line will be at 3460. Gotta break that for any hope of a reversal. Uptrending resistance is now around 3459, 3470-75. If they clear those consider 3500 a done deal.
I’ll be trading from the long side again today unless something radical happens.
I caught that one breakout yesterday, and spent the rest of the day floundering, dipping toes in the water. The sharks bit them off.
Later!
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Tax collections have leveled off at a negative year to year rate. The Fed has gone to Congress begging for fiscal support for the US economy, as a result. Without a deal to raise spending, the economy will continue to languish, and the Fed will continue to print money to support the markets.
Ironically, if and when a new pandemic relief spending program is enacted, that would be bearish.
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Mixed cyclicality has led to a rangebound market. There’s no sign that that will change this week. But look out if it does!
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And from Liquidity Trader, where I’ll post another update later this morning.
Primary dealers have maintained huge and heavily leveraged long bond positions. They are only lightly hedged. Just today, the bond market is threatening to reverse the long term downtrend in yields/uptrend in prices. It’s bad news for the bond market, and for the system as a whole. And that includes stocks.
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KNOW WHAT’S HAPPENING NOW, before the Street does, read Lee Adler’s Liquidity Trader risk free for 90 days!
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