Lee AdlerThe market remains in a narrow, liquidity-driven uptrend, fueled by residual cash reserves and dominated by the Mag 7.
A little oopsie. RRP slush fund falls $57 billion today as counterparties withdraw funds to buy the flood of T-bill issuance. The slush fund should be bone dry in about 10 days.
Short-term cycles are due to enter a down phase. Like last week, price continues moving sideways toward the apex of a triangle, with vague hints from the cycle and momentum indicators that the breakout will be to the upside toward a peak between xxxx and xxxx.
This is impressive. With today’s T-bill announcement of a mammoth $245 billion in gross issuance and $60 billion in net new paper, the Treasury is issuing $127 billion in net new T-bills this week. And the markets are yawning.
Something will break, soon. See this week’s Liquidity Trader Macro Liquidity update for details on what to expect.
The liquidity cliff is here. But nothing has changed. Stocks have been rallying. Bonds are rangebound.
We’re now at a critical fork.
Despite new short-term highs, the S&P’s rally remains precarious and thin. Divergences across indices, failing cycle thrust, and deteriorating cycle breadth indicate a market under internal stress. The market has arrived at the precipice of the liquidity cliff.
Gold’s technical picture shows mixed cycles as the price tests long term trend support. The latest analysis reveals key cycle confluences that should drive the next major move. Four mining picks are listed for the next swing.
All but a couple of shorts on the list were closed last week and none were added this week because the screens identified no good short-term setups.
The liquidity cliff has been delayed as the US Treasury has not moved with its usual speed when the debt ceiling is lifted. It must restore accounts that it has raided under “extraordinary measures” to stay under the previous debt limit. And it normally moves to rebuild the Treasury account (TGA) to its target level, announced at the quarterly refunding announcement. In this case that’s $850 billion.
The liquidity cliff has been delayed as the US Treasury has not moved with its usual speed when the debt ceiling is lifted. It must restore accounts that it has raided under “extraordinary measures” to stay under the previous debt limit. And it normally moves to rebuild the Treasury account (TGA) to its target level, announced at the quarterly refunding announcement. In this case that’s $850 billion.
Short-term cycle corrective phases have begun just as the market approaches critical resistance. Sell signals are multiplying. The uptrend remains intact — but it may not survive another bad day or two.
Gold’s technical picture shows short-term cycles completing their bottoming process and aligning with longer-term upward momentum. The latest analysis reveals key cycle confluences that should drive the next major move. Multiple timeframes are getting in gear. I have chosen four mining stocks that look well positioned to take advantage of the next rally.