The market has now been making lower highs and lower lows for two months. If that’s not a bear market…
Yesterday was ill liquidity exemplified. Ill liquidity is a sickness caused by a shortage of money. There’s a shortage of money because the US government keeps borrowing more of it, and the buyers of the debt aren’t using enough of their existing cash and credit to buy it, to keep prices in balance.
$157 billion in net new Treasury issuance in 8 days leaves a mark. Only $88 billion was withdrawn from the Fed’s RRP slush fund to help absorb all of that shit. We don’t yet know how much private repo was taken down to finance the rest but it’s obvious from the price behavior of stocks and Treasuries that liquidation of other held securities was a big source of the funding. So down we go. The Rhymes of History
The hourly chart of the ES, 24 hour S&P futures is just plain ugly. If they take out 4260 today, the conventional measured move target of the head and shoulders top breakdown would be 4185-90. They would test the low at 4238.5, and if that broke, the implied target would be 4150. The bulls’ biggest hope is that the 5 day cycle projection is only 4250-55. If they make a stand there, then maybe they can turn it.
Maybe. Maybe not. Time…
A better representation of the effect of supply on the market can be seen in the price of the TLT, 20 year Treasury ETF. You can see where that’s headed. It equates to a 10 year Treasury yield around 7% or higher. Somebody else will need to do the math for me. I will post a couple of new reports here today and tomorrow. https://liquiditytrader.com/index.php/category/monetary/
For moron the markets, see:
- Screen Picks – Definition of Insanity Exemplified October 2, 2023
- On the Lookout for Big Low October 1, 2023
- Gold on the Brink of Secular Trend Sell Signals September 27, 2023
- The Rhymes of History September 24, 2023
- Beware! Jobs Really Much Weaker Than They Say September 4, 2023
- Here’s Why This Is a No Clickbait Market for Primary Dealers August 24, 2023
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