Lee AdlerThe S&P 500’s triangle breakout failed immediately last week, and cycle, momentum, and breadth indicators are lining up around a synchronized outcome. This week’s action around key support levels should clarify what that outcome is likely to be. This report describes the criteria to watch, and what to expect if they are triggered.
Primary Dealer fixed income holdings have fallen since March, and most of the decline appears to be mark-to-market losses. The Treasury keeps adding supply, of which the Fed absorbs only a fraction, leaving dealers to take their share, required by their special status, as bond prices erode and the 10 year yield pushes toward 5%. The result is a deleveraging cycle in dealer balance sheets that raises the risk of forced, disorderly liquidation across markets.
This report shows where the cracks are in the Primary Dealer holdings, financing, and hedging statistics through mid-July. It also includes a look at hedge fund positions in the bond market, which are another canary in the coal mine of deteriorating liquidity conditions across asset classes.
This report features two charts that tell a coherent and sobering story. Repo financing that has quietly fueled this rally is plateauing in exactly the pattern that has preceded every major correction of the last few years. At the same time, junk bond spreads are sitting within a hair of their tightest levels in three years, which is precisely the condition that leads to an eventual unwind that is violent instead of orderly.
I have warned for months that the wave of Treasury supply set to hit in July would open a window of extraordinary risk. Below, these two charts, which you won’t see anywhere else, show why the calm on the surface is the least reassuring thing about this market.
reason for caution, given the weakness in longer term indicators.
The S&P 500’s triangle breakout failed immediately last week, and cycle, momentum, and breadth indicators are lining up around a synchronized outcome. This week’s action around key support levels should clarify what that outcome is likely to be. This report describes the criteria to watch, and what to expect if they are triggered.
The Treasury market is facing a dangerous convergence of forces as a massive wave of new supply hits a financial system fueled by a final, parabolic surge in money growth. Other asset classes, particularly stocks, depend on a stable Treasury market foundation. While stock markets have remained buoyant, the underlying mechanics that have driven years of asset price inflation are reaching a stage of extreme, perhaps terminal, excess.
The S&P 500 broke out of its multi-week triangle pattern, but there’s reason to be cautious and treat this as an opportunity to reduce risk. Those reasons are explained and illustrated in the report. The Dow remains stronger, though that strength is concentrated in a handful of heavily weighted names. Most cycles are still nominally pointed higher, but signals in the most important intermediate cycle are troubling, and indicators across several timeframes are sitting inconclusively near neutral. The question is which way they are more likely to break in both the short and intermediate term.
This report explains the setups, and points out the levels where you should be prepared to act.
Gold appears to be setting up for a xxxxxxxx xxxxx xxxxxxx low, ideally due xxxx. The projection is only slightly below current levels, within the normal range of error. However, a break of the recent low around 3950 would trigger stops and could generate a washout to projected wave support that reaches xxxx in x weeks. Resistance is around xxxx.
The S&P 500 remains pinned in a tightening triangle pattern, with cycle indicators split between an exhausted 6-month uptrend and fresh strength in the underlying cycle screens, leaving this week’s close as the to be tie-breaker for the next directional move. Here’s what the data shows about the likely outcome. Is it true that flat is, as flat does, or are there hidden signs and portents?
The federal budget deficit is running far ahead of the CBO’s $1.7 trillion fiscal 2026 forecast, driven by collapsing corporate tax receipts, court-ordered tariff refunds, and a surge in outlays that official war cost figures cannot explain. Treasury supply is already at record levels and the market’s capacity to absorb what’s coming will be severely tested. So will Fed Chairman Warsh’s stated goal of reducing the Fed’s market footprint. This report has the details, and implications for professional investors.
Gold appears to be setting up for a xxxxxxxx xxxxx xxxxxxx low, ideally due xxxx. The projection is only slightly below current levels, within the normal range of error. However, a break of the recent low around 3950 would trigger stops and could generate a washout to projected wave support that reaches xxxx in x weeks. Resistance is around xxxx.
The S&P 500 remains pinned in a tightening triangle pattern, with cycle indicators split between an exhausted 6-month uptrend and fresh strength in the underlying cycle screens, leaving this week’s close as the to be tie-breaker for the next directional move. Here’s what the data shows about the likely outcome. Is it true that flat is, as flat does, or are there hidden signs and portents?