Stop, look, and listen, instead of reading.
The first shoe has dropped. Now we wait for the other. Will it be a long wait?
Maybe not. There’s a current 5 day cycle projection of 3980-4000 on the hourly chart of the ES, S&P 500 continuous 24 hour fugutures.
That’s not far from where we ended yesterday, and just below that are multiple lines of sport down to around 3950 that represent the Maginot Line for the bulls. The bears will just need to go around it, and it doesn’t seem likely before the weekend.
I’m just guessing of course. I don’t know and neither do they. Anyone that pretends to know, and proclaims that we’re in a meltup or the like, is a charlatan. Unlike them, I don’t pretend. I just follow the trend. I don’t fight the Fed, and know the trend is my friend.
Meanwhile, the 13 week T-bill rate, which is set by the market in response to the supply of money, and demand for US government short term debt is showing the Fed where it will need to rubber stamp the Fake Funds rate at next week’s FOMC circus. Jerome the circus barker is rehearsing his act as we speak, preparing for the oohs and ahs of the Wall Street media crowd. While he puts on a show, the outcome has already been determined and revealed.
Quantitative Tightening is Here, and the Effect Will Be Devastating
While short rates are soaring, the 10 year yield had a pop last week and now is marking time as the market gets ready for the next mid month auction of Treasury coupons. This month that will total a net of $73 billion. That compares with $55 billion on May 16, and $34 billion on April 18. I don’t think that this will go well, especially with the Fed pulling $60 billion out of the banking system this month. The market did not yet need to contend with that in April and May. Read more about where this is headed and how to trade it, here.
In the realm of things that aren’t real, the craptos continue to turtle. It’s easy to see on the BTC hourly chart where the short term sport and resistance lie, and where the trigger is for a rally back to 31,200, or not. Stay tuned for all the thrills, chills, and excretement, in today’s episode of Crapto Park.
In the realm of things that are real… sort of… we turn to major currencies. The you row has apparently resumed its downtrend against the US doodah, on the heels of yesterday’s ECM nonsement that it was about to really, truly, honesttagod gonna start tightening in the face of 8% inflation. No more negative rates for you!
Now, we would expect that when a central bank announces a tightening, its currency would rally. But alas, everything is relative, as the great monetarist Albert Einstein theorized. So in the price of one currency versus another, it all depends on who is tighter. And there’s no question. The Fed is the tightest shoe in the closet.
Those who therefore tell you that the USD is trash, let me say this about that. It may be trash, but the whole financial world is a dumpsite. And the Fed’s trash is the most valuable garbage because the Fed is taking out the trash and burning it. It’s going up in smoke. The ECB and BoJ are preserving their trash. As long as that’s so, the USD will be the most valuable piece of trash in the dump.
In fact, borrowers and investors the world over will be dumpster diving for it. They’ll keep buying and buying and the USD will just keep getting stronger. It won’t be a straight line. There will be bumps along the way as the charlatans lead their flocks astray. But one thing will still be true in the end. Rule Number Two. The trend is your friend.
Some of you are gold fans. Gold has a tough row to hoe against this strong doodah. But relative to all other assets, it will do better. and if it can buck this strong doodah it will be the place to be. But it’s yet to show whether it can. I’ll be watching, and I’ll let you know. Follow along here. I’ll even give trade suggestions for which mining picks to swing and when.
All of which leads us to the point. If you want to stay on top of the big picture, with not only clear analysis that has been mostly right for the past 22 years, but with strategic and tactical suggestions, and actual trading ideas, check out this list of summary pieces over at Liquidity Trader. 90 day risk free trial for new recruits!
- Like Pulling Gold Teeth June 7, 2022
- Swing Trade Screens – Dipping A Short Toe Before the Next Big Wave June 6, 2022
- Here’s Why It’s Too Soon to Go Short Again (Mostly)June 6, 2022
- The US Economy, Including Jobs, Collapsed in May June 2, 2022
- Quantitative Tightening is Here, and the Effect Will Be Devastating June 1, 2022
- A Great Week for Swing Trade Screen Picks May 31, 2022
- We Hold Our Gold Miners, Add Another May 24, 2022
- Stocks Are Ahead of the Curve May 23, 2022
- Dealer Positions Show It’s Not Getting Better and It Should Get Worse May 15, 2022
If you’re serious about the underlying forces of supply and demand that drive the markets, join me!
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