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At 5:30 AM in New York, the ES has turned up, broken out, and reached resistance.
The economic rebound from the depths of the pandemic panic in April and May has ended. The economy may be rolling over again. Bad news for workers and consumers, but not necessarily for investors.
The US Government did no pandemic relief spending in August, and none is on the immediate horizon. Despite that, the monthly budget deficits are freaking enormous and frightening.
Tax receipts are weak and they will provide no relief from those deficits. The US Treasury will continue to borrow massive amounts of money in the markets.
Sounds like bad news for the stock market, right?
Eh, not quite. Here’s why.
Friday’s low on the ES was a fraction higher than Tuesday’s, but as of 5 AM in New York, they hadn’t cleared Fridays high, and there’s been a slight downtick from the test an hour ago. Hourly indicators are still bullish…
The June selloff was 265 points high to low. So far, the current selloff has hit 278. Bigger? Nope, not in percentage terms. This one is -7.7%. That one was -8.2%. So, we can still say that this time isn’t different.
Yet. But there’s smoke. Plenty of it.
Looks like the end result may be worth the snafu yesterday. When the upgrade stalled, tech support first showed up, and then they abandoned us for the rest of the day. Sorry about that! And now, to today’s charts and outlook.
To start your morning, here’s the hourly of the ES along with what to look for today.
Well…
The selloff that we expected as a result of the scheduled month end liquidity shortage happened.
Just one problem.
At 7:45 AM in New York, the S&P fucutures were heading for a test of last week’s low, with what should be an intervening support level around 3380.
From the NY Fed yesterday, plus what’s coming up.