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Month: April 2021

Markets Awash in Cash – Where, How, and How Long, Revealed

The markets are awash in cash. It shows up on the Fed’s balance sheet. It shows up in the Treasury account, and in Primary Dealer Accounts. It shows up in Reverse Repos.

That cash is coming from the US Treasury’s campaign of paying down T-bills. Those paydowns have totaled $430 billion since February 23. It’s an abomination of market manipulation. But it has worked to stabilize the bond market, levitate stock prices some more, and some more, and some more, and to stave off yet another Primary Dealer collapse.

We can follow these flows via the Fed’s weekly balance sheet statements, and the charts and indicators we derive from it.

The Treasury still has $1 trillion in its account that it must spend down. Annual taxes are still coming in, replenishing that account. The Treasury will almost certainly continue to pay down T-bills until there’s no cash left. I will do a revised estimate of when that will be from the April end of month Daily Treasury Statement. Prior to that, I give my best current swag in this report.

Until then, the cash will continue to flow. This report shows you exactly how this impacts stocks and bonds, so that you know how to play it, and when to GTFO.

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Stock Market Gets Knocked Down But Still Packs Punch

Cycles are mixed, with all shorter cycles in down phases that are still flat, but could grow teeth. The longer term structures and outlook stay bullish.

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These reports are not investment advice. They are for informational purposes, intended for an audience of investment and trading professionals, and other experienced investors and traders. Chart pick performance changes week to week and past performance may not indicate future results, as you know. Trading involves risk, and these reports assume that you understand those risks and manage them according to your tolerance. 

Get ’em While They’re Hot – Swing Trade Picks For Week of April 26, 2021

I took some time off from trading this week, which was probably a good thing, considering the whippiness and suddenness of the changes of direction. I ran screens during the week, but did not look at them. For the week there were 115 buy signals and 137 sell signals. The picks below are from the screen I ran from Friday’s data.

Every week I run technical stock screens covering all NYSE and NASD stocks trading above $6 and averaging more than 1 million shares a day. Then I apply technical filters looking for short term cycle buy and sell signals near key longer period cycle support ranges. This typically results in between 30 and 50 charts to review visually. I’m looking for low risk, high reward price structures, which I’m not smart enough to program into the screening process. But it’s ok. I like to look at charts. 😊

Last week was a rough ride with all the whipsaws. 5 stops got clipped. The chart pick list had an average gain of 3.5% with an average holding period of 13 calendar days.

Liquidity is Still Bullish, And Even More So in May

The balance between QE and Treasury supply remains bullish. This should provide an underpinning preventing the stock market selloff from going too far. At the same time, Treasuries have apparently put in an intermediate term low.

May will be even more bullish, but there are trends in place that will end the party, and we have a pretty good idea of when.

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FREE REPORT – Proof of How QE Works – Fed to Primary Dealers, to Markets, To Money

Space Needle Construction Under Way

Is the stock market constructing a space needle pattern on the charts? Cycles remain in gear to the upside for all time frames from 4 weeks to 10-12 months. We have updated price projections for the tops projected for early this summer. But in the short run, look for more foundation building. Don’t let that trick you into thinking that it’s something that it isn’t.

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Not a subscriber? Follow Lee’s market analysis and outlook, with price and time targets, and weekly swing trade chart picks, risk free for 90 days!  

These reports are not investment advice. They are for informational purposes, intended for an audience of investment and trading professionals, and other experienced investors and traders. Chart pick performance changes week to week and past performance may not indicate future results, as you know. Trading involves risk, and these reports assume that you understand those risks and manage them according to your tolerance. 

Swing Trade Picks For Week of April 19, 2021

Every week I run technical stock screens covering all NYSE and NASD stocks trading above $6 and averaging more than 1 million shares a day. This typically results in between 15 and 50 charts to review visually. I’m looking for low risk, high reward price structures, which I’m not smart enough to program into the screening process. But it’s ok. I like to look at charts. 😊

The list had an average gain of 6.0% with an average holding period of 15 calendar days last week. It was well positioned to ride the rally as all of the picks were buys. There were no shorts.

This table below shows how that compares with the previous 6 weeks. It was the best performance over this period.

Bogus Bank Earnings Hide The Danger In Primary Dealer Inventory Losses

Primary Dealer data is always among the most important types of data for us. I look at it in as many ways as possible with the data that’s available.

On rare occasions the data tells us that change is under way. Most of the time, it simply confirms what we already had concluded.

Today, the macro data on the Primary Dealers and the big banks does not support the strong bank earnings that the big boys reported this week. The data suggests that a supply tsunami will hit the market soon (at the time projected in one of our recent reports). The Primary Dealers’ difficulties will become paramount, and the Q1 bank profits will have proven illusory.

The markets will have foreshadowed the reporting of that before the news is out, as always. Technical Analysis should sound the clarions as the turn gets under way. In the meantime, this analysis tells us that the conditions for a turn are building toward a crescendo.

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FREE REPORT – Proof of How QE Works – Fed to Primary Dealers, to Markets, To Money

Treasury and Fed Go Hog Wild To Rescue Dealers This Week

I just want to give Liquidity Trader Money Trends subscribers a quick heads up. We always expect extra liquidity around the middle of the month, and we look for rallies at this time because of it. But we just got a little more juice from Doctor Yellen.

The US Treasury is again going hog wild with T-bill paydowns, announcing $62 billion over the past week alone. There’s actually a net paydown in April, after new coupon issuance. Extra slosh for the party.

And, of course, this week is the Fed’s regular monthly MBS QE purchase settlement week April 14-21. They’re pumping $93 billion into Primary Dealer accounts this week. The dealers have been up against it in managing their bond inventories, and the Fed and Treasury are, as always, doing whatever it takes to rescue them.

So all the explanations that you are seeing in the media about why Treasuries are rallying are just so much BS from the clueless mob. It’s about money plain and simple. The Fed and US Treasury are doing a great job of manipulating prices in the short run by pumping a combined $185 billion into the markets, most of it directly into the accounts of Primary Dealers in a very short period.

We were prepared for and expecting this liquidity to boost the markets this week as usual in the third week of the month, but the additional T-bill paydowns over the rest of the month are a new wrinkle that will add even more liquidity than we expected. The end of month period may not be as dry of funding as usual.

This too shall pass, and we know that the end is nigh!

I will cover the issues in depth in one or two subscriber reports this weekend. That will include additional detail on Primary Dealer positioning. Stay tuned!