A 3 day cycle up phase has now been flat on the ES S&P 24 hour futures hourly chart for more than a day. Flat up phases imply sharp down phases. Of course, they don’t always work out that way. Sometimes the subsequent down phase just continues sideways in a dead zone until there’s some impetus.
We expect liquidity impetus this week as tax receipts drive T-bill paydowns. While most of it flows into money market funds, it does force some cash into the pockets of some dealers and other equity investors who had held the expiring bills. Whatever it is, at the margin, it’s usually enough for a seasonal rally in stocks.
Of course, I can’t remember the last time this happened in a draconian Fed tightening cycle, and I’m pretty old. So let’s just honor the charts. The rules still rule. Rule One, Don’t fight the Fed. Rule Two, The trend is your friend. AKA Don’t fight the tape.
Right now, the tape looks like caca.
Meanwhile, here’s a wildly bullish chart. That is until you look at the ticker and see that it’s the chart of the 10 year yield.
Therefore, it’s the inverse of price. The weekly chart of the TLT, 20 year Treasury bond ETF gives you some perspective.
The big picture:
- The Dow, Macro Liquidity, and the Fate of Russian Generals April 18, 2022
- Stocks Are Not Breaking Bad April 16, 2022
- Sell Gold in May and Go Away? April 19, 2022
- Primary Dealers Still Long and Wrong, But A Gift Rally Looms! April 11, 2022
- Why March Withholding Taxes Showing Red Hot Economy Is Bearish April 3, 2022
- Fragile and Dangerous Semi Blind Spot March 28, 2022
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