$74 billion in T-bill paydowns so far in April have been enough to cover net new Treasury coupon issuance with $40 billion left over for other games. It hasn’t helped the bond market. Treasuries continue to be liquidated, and short term T-bill rates continue to soar despite the excess cash flooding the market over the past couple of weeks. So what happens to a bit of that excess cash at the margin? The them buy stonks. It starts with targeted raids on the shorts and bleeds out into the broader market.
There’s no surprise here. It happens every April, and I laid out the likely scenario for you over and over for the past month or more.
In fact, even the technical indicators warned us to be prepared for a rally. So this, again, is no surprise. Up, up and away this week on the ES S&P 24 hour futures toward a 5 day cycle projection of 4510, and a conventional measured move target of 4560-70. That’s based on the breakout from the rounded bottom base that formed over the previous six days.
To get to that target, the market will need to chew through a thick layer of resistance in the 4510-25 area. I wouldn’t get too excited if it rolls over below that. There’s still a lot more cash coming over the rest of this month. The market would need to break trend sport, which will be around 4470 as New York trading opens, to have any hope of creating a downside reversal that amounts to anything.
I don’t see that happening today.
The big picture:
- Swing Trade Chart Pick Screens Flip to Buy SideApril 18, 2022
- 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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