Primary Dealers are pulling back from Treasury absorption — not by choice, but by constraint. With inventories falling despite relentless coupon issuance, the data confirms what recent auctions have already hinted: dealers are maxed out.
This report unpacks what the May 21 breakout in yields really signals—and why the next phase of Treasury supply could bring more than just higher rates.
A massive increase in volatility has repeatedly broken historically normal wave bandwidths, signaling abnormal wave amplitudes as the trend goes parabolic. Trend support around 3295-3300 was seen as critical in the short run. It broke, and then whipsawed. The uptrend is thus still intact. A test of the high looks likely, with more fireworks through the summer. But longer term projections suggest that there’s little upside remaining.
This rally has been a grinder. Since it began, setups have been harder to trust, in a market driven more by headlines than structure. I’ve been too cautious, as short-term waves reversed with near unprecedented ferocity. But the charts are starting to look more normal. This week, I found five shorts I liked and 3 longs. This is still cycle-based with rigorous questioning of setups, while finding more that I’m comfortable adding to the list.
The market is still riding a powerful meltup, and short and intermediate-term cycle projections are pointing even higher than they were last week. The Moody’s downgrade has triggered a pullback this morning, but the selloff must follow through to break trend. Otherwise, the index remains on course for potential exhaustion targets above xxxx—even as the Cycle Wave Composite and long-term structures warn that this remains a topping process.
This report outlines the dangerous game now unfolding: artificial liquidity abundance from Treasury debt limit management policy, masking the structural change just ahead.
The S&P 500 continued its sharp rally, bolstered by April’s massive Treasury paydowns. The surge has driven prices into upper channel resistances across short, intermediate, and long-term cycle frameworks. The rally remains intact, but multiple cycle indicators suggest the risk of reversal is rising. Here’s what to look for.
As we get into the heart of baseball season, I’ve been in a slump, finding it difficult to catch up with the fastballs that the market has been tossing. This week, I saw only one pitch that I liked enough to take a swing. It was a buy in an out of favor sector, energy. I chose not to swing at buy signals that have already been on a run. Having been late on the first strike last month, now is not the time to become impatient and chase.
Gold’s trading range could engender a dangerous complacency.
The Treasury is burning through cash at a rate that assures destruction by mid summer. Once the TGA hits that level, the debt ceiling must be lifted—or the U.S. government will default. This is the moment I refer to as DOAD: Do A Deal or Die.
Technical Trader subscribers click here to download the full report. Last week’s short term cycle projections of 5550-5700 have been reached. All major cycles remain…
Subscribers, click here to download the report. April’s tax data shows slowing revenue growth, stable trends in key categories, and strong tariff growth. But the…
Subscribers: Download the full report here I remain cautious about adding picks in the environment where the market is highly susceptible to news response with…
Lee Adler