Since this rally began on July 14 there have been 8 tiny sharp pullbacks. The one that started overnight in the ES 24 hour continuous S&P fugutures doesn’t even qualify to be in that group yet. It has slightly broken the latest uptrend channel, but the break is meaningless so far. To have meaning, they need to conclusively break 4277.7. Then we might have a very short term reversal. But a lot more evidence would be needed to form a more meaningful top.
And if they stay above 42 triple 7, then this is just another consolidation in this relentless meltup.
Here’s the 2 hour bar perspective of the entire rally from its inception on 7/14. Question here is whether we roll 7s or not.
Fed Falls Further Behind the Rubber Stamping Curve
Meanwhile, the Fed remains egregiously behind the market in rubber stamping market interest rates. I don’t know why they even bother. Rates are and always have been completely irrelevant until they become punitive in real terms. And even that is a byproduct of the central bank creating a money shortage.
The Fed is in the process of creating a money shortage now, but traders and their dealers have created their own money temporarily via the cycle of margin borrowing. That has a limited shelf life when the Fed isn’t there supplying an ever increasing backstop. Only the timing of the end is unknown. For that, we rely on the TA.
Bitcoin-Stock Market Correlation Warning
For more than a year the trading patterns of BTC and stocks have correlated strongly across all time frames. This chart of the two hour bars on BTC with the ES overlaid shows BTC possibly leading stocks. So far it hasn’t mattered over the past couple of days, but if BTC breaks 23,600 my guess is that we’ll start to see stocks slipping also. It will be interesting to watch this correlation.
It’s obviously not causal, but it reflects unseen forces below the surface that move both markets, which have so much in common, concurrently.
To understand and profit from the big picture check out the following.
- Swing Trade Screens – Buys Overwhelm Sells, It’s Late But One Sector Looks Ready to Roll August 15, 2022
- Yikes! August 15, 2022
- Mildly Bullish Outlook for Gold Holds August 13, 2022
- “As Good as It Gets” Was Good While It Lasted August 6, 2022
- Treasury Confirms Supply Tsunami We Expected – Will Obliterate Everything August 3, 2022
- Withholding Tax Collections Solid in July, But Here’s Why the Party is Over August 2, 2022
- The Bond Rally That Fooled The Majority And Didn’t Help Dealers July 27, 2022
- As Good As it Gets, Before the End of Time July 18, 2022
- Are the Fed and Treasury Geniuses, or Just Lucky? Part One July 12, 2022
If you’re serious about the underlying forces of supply and demand that drive the markets, join me!
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