Lee AdlerThe market broke its downtrend last week but established a new intermediate downtrend channel, with cycle alignments suggesting an intermediate low forming here. However, failure to mount a significant rally from current levels or a breakdown of key support could still trigger a crash.
Current results are terrible, in fact the worst month since beginning this exercise 9 years ago, and especially since tweaking the algorithms in November 2024.
Cycles are in gear to the downside, except for the 4 week cycle, which has extended beyond its ideal bottom window. The 6-7 week cycle projection of xxxx is an outlier for now, but if projected channel support around xxxx breaks, this could turn into a steep, fast decline to much lower levels. The next support area is around xxxx.
Federal tax data tells a story the BLS doesn’t: employment growth is stalling, corporate profits are getting squeezed by tariffs, and a ballooning deficit shows no sign of moderating — with war costs making it worse. That can mean only one thing.
The list currently has an average loss of -4.3% on an average holding period of 20 calendar days. This is an improvement over last week’s 7.2% loss thanks to strong performance of open picks, which have an average gain of 4.6% over 20 calendar days. But it comes after weeks of disastrous model output, and my selections. I question whether the model can provide reliable output, in a market that has more government interventions than possibly ever.
The S&P 500 remains confined within a narrow downtrend channel, with indicators signaling major trend weakness. While a news-driven rally is under way this morning, if the index fails to sustain gains and if key support levels fail to hold this week, this would be a potential crash setup.
Cycles are in gear to the downside, except for the 4 week cycle, which has extended beyond its ideal bottom window. The 6-7 week cycle projection of xxxx is an outlier for now, but if projected channel support around xxxx breaks, this could turn into a steep, fast decline to much lower levels. The next support area is around xxxx.
The tide that floated all boats for three years is receding. The perpetual motion machine that debt built is running in reverse. The Treasury basis trade that quietly financed the federal deficit while fueling a three-year equity bull market began unwinding in September 2025, and the liquidity architecture it supported — repo, foreign central bank demand, and speculative equity commitment — is now deteriorating simultaneously, with no replacement buyer in sight.
The S&P 500 remains confined within a narrow downtrend channel, with indicators signaling major trend weakness. While a news-driven rally is under way this morning, if the index fails to sustain gains and if key support levels fail to hold this week, this would be a potential crash setup.
I believe that the behavior of the list in the last couple of weeks indicates a market undergoing major transition, where cyclical factors appear conducive to supporting external shock. …
I have chosen 4 short sales this week ….
The Treasury market faces growing fragility as Primary Dealers are forced to absorb a relentless supply of government debt. To manage this “deal with the devil,” dealers have turned to extreme financial engineering, ballooning their leverage through repo markets and complex hedging to keep prices stable. However, this mountain of offsetting long and short positions has created a precarious equilibrium; any sudden widening of the narrow gap between cash and futures markets could trigger a rapid, uncontrolled unraveling of hedges.
Cycles are in gear to the downside, except for the 4 week cycle, which has extended beyond its ideal bottom window. The 6-7 week cycle projection of xxxx is an outlier for now, but if projected channel support around xxxx breaks, this could turn into a steep, fast decline to much lower levels. The next support area is around xxxx.