The US Treasury has been pumping a gusher of cash into the market ecosystem in December, but Composite Liquidity remains flat. And that, my friends is bearish.
The Treasury continues to need a hundred billion a month or so in funding that it gets by selling long term debt into the market. That constant new supply of debt that it sells in the market puts a lid on any attempted bullish moves in either stocks or bonds. Non-subscribers, click here for access.
The components of macro liquidity are still not conducive to being able to fully absorb that supply, and therefore put in a bottom to the liquidation of stocks. Liquidation of stocks will continue to be a necessary feature of absorbing the constant supply of Treasuries (not to mention increased debt issuance by other sovereigns).
In that context, every rally in stocks is a gift to short sellers. Non-subscribers, click here for access.
As I discussed in the last review, it’s not useful in this environment to view the market as oversold. In this report I show you the charts that give the reasons for this view. And I propose both strategies and tactics to take full advantage of this environment. Non-subscribers, click here for access.
KNOW WHAT’S HAPPENING NOW, before the Street does, read Lee Adler’s Liquidity Trader risk free for 90 days! Act on real-time reality!