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Author: Lee Adler

Fragile and Dangerous Semi Blind Spot

Lee Adler

This report shows the imbalance of Fed liquidity driven demand and the coming short term liquidity boost from seasonal Treasury paydowns. However,  I’ve added something to this report that makes clear just how dangerous this market is.

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Banking data shows us the growing fragility of the system. Given that fragility, any seasonal liquidity driven rally in stocks and bonds will be a gift to those who have been holding and hoping. It will be yet another chance to get out. This report lays out the timing of that liquidity surge, and the likely impact on the markets. Non-subscribers, click here for access.  

The rally has already begun in the stock market. It could see a bit of a shake over the next week or so, but with massive Treasury paydowns on the way, I don’t expect the rally to be derailed yet. So I’m willing to give my buy side swing trade picks featured in the Technical Trader more running room here. They’re doing well. I expect that to continue.

Of course, bonds haven’t rallied in the past couple of months. Instead, they’ve crashed yet again. But the conditions will be ripe for a reaction rally in the Treasury market and related fixed income markets starting next month. This report lays out the likely timing and yield parameters of the next move in bonds. If I owned any bonds, here’s what I would do.

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FREE REPORT – Proof of How QE Worked – Fed to Primary Dealers, to Markets, To Money will help you understand why going in reverse will be a disaster.

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Screens Be Nimble, Screens Be Quick – They Were!

Lee Adler

When I ran the data the raw daily totals for last week, there was a surprise. They ended with a solid edge to the sell side. The final score for the week was 122 to 51, Sells over Buys. The week before, buys had a solid edge, 185 to 71. That compared with 187 to 146 Buys over Sells, the week before that. Buys also led three weeks ago. The balance had been consistently tilted to the buy side since March 4.

Technical Trader subscribers click here to download the complete report.

The preponderance of sell signals last week suggests that it’s time for a consolidation, at least. However, when I reviewed the final screen of the week’s previous signals, I didn’t see anything I liked as a short sale.

The screen results come from a universe of approximately1200-1500 stocks daily that meet the criteria of trading above $6.00, and with average volume greater than a million shares per day. The final numbers show the number of stocks with at least one buy signal or sell signal during the week.

On Friday, March 25 alone, there were 23 buys and 25 sells. It seems to contradict the gain in the market averages Friday, but it’s narrow enough and small enough to indicate that it’s merely a function of the fact that the buy train has left the station. It’s not a sign that the train has reached the end of the line.

I screened the lists of previous daily buys and sells from Monday through Thursday. From that ouput, I looked for additional signals in the progression on Thursday and Friday. The final lists resulted in 12 chart pick candidates on the buy side and 15 on the sell side. I reviewed those visually, and also looked at final signals triggered the week before.

After reviewing those charts, I chose 3 to add to the list (subscriber version only). All were on the buy side. This string of all buys is now 3 weeks old. That’s a shift from the prior 3 months when all picks were on the short sale side.

Adding those buys this week leave the list with no open shorts and 8 buys.

Last week we started with 7 picks on the list. There were two shorts and the rest buys. The shorts hit their stops with small losses. Including those and the picks still open at the end of the week gave the list average gains of 2.0% with an average holding period of a week.

The week before saw an average gain of 5.3% with an average holding period of two weeks. This was with mostly longs. The week before that saw an average gain of 10% on an average holding period of 19 calendar days. That was with all shorts. So the screening method reversed positions right on time, in going from short to long.

The percentage gain is based on 100% cash positions, with no margin and no use of leverage or options.

The new picks, along with picks that remain open, and those closed out last week, are shown on the table below. Charts of new and open picks are below that.

Technical Trader subscribers click here to download the complete report.

 

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Here’s Why This Will Be “The Rally that Fools the Majority”

Lee Adler

At the beginning of most great bear markets, there’s invariably a big rally that convinces most that the bull market is still running. Then the market tops out a little below or above the last market peak, rolls over, and proceeds to drop in a series of stairsteps that lasts from 12 to 30 months.

Those are real, grinding bear markets. We haven’t had one of this since 2007-09, because every time one threatened, the Fed intervened to re tilt the playing field. It probably can’t do that this time, because of the entrenched high inflation.

Technical Trader subscribers click here to download the complete report.

Joe Granville called that last rally, “the rally that fools the majority.” There are signs that this could turn into just that. I’ve been posting long side trades for a couple of weeks. It looks as though we can stay with them xxxx xxxx (subscriber version). Xxxx xxxx xxxx xx xxxxx reverse that strategy.

Cycles –   The 6 month cycle has clearly entered an up phase, ideally due to top out xxxx xxxx (subscriber version).

In that context, up phases in shorter cycles should continue xxxx xxx xxx xxxx (subscriber version) next few days. The 13 week cycle high is ideally due by xxxx xxx at a projection of xxxx. But its indicators are positioned for an extended up phase, so I wouldn’t marry that xxxx xx date.

6-8 week cycles are due to peak xxxx xxx xxx with a projection range of xxxx-xxxx. The 4 week cycle is ideally projected to top xxxx xx xxx  in the xxxx-xxx area.

Third Rail Chart –  The lower line of the wider meltup channel starts the week at xxx on Monday and rises to xxxx on Friday. The meltup will remain intact for as long as that line remains unbroken.

Intermediate trend downtrending resistance starts the week at xxxx and descends to xxxx on Friday. If cleared, the SPX will then target apparent resistance around xxxx.

Long Term Weekly- For now, I must assume that this is a bear market rally. But if it clears the long term trendline around xxxx this week, that view could change. That would call for a tactical adjustment in trading.

Monthly Chart – The mid March rebound has formed another equal width uptrend channel. Its lower line is around xxxx in March and xxxx in April. Resistance is around xxxx in March and xxxx in April.

Cycle Screening Measures – The cycle screening aggregate stayed pinned at a high level all week. This remains bullish for both the short term and intermediate market trend.

Technical Trader subscribers click here to download the complete report.

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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. 

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Give It To Me One More Time, Goldie

Lee Adler

Short term and intermediate cycles are in gear to the downside, but the 9-12 month cycle remains due for one more upleg to a new high of xxxx by xxxx xxxx  (subscriber version).

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The high base breakout on long term charts that we’ve been looking forward to is essentially complete, and confirmed by a breakout in long term momentum. The initial conventional measured move target is xxxx (subscriber version).

A long term cycle high is due in xxxx.

In the miners, over the  week ended March 18, 14 charts of the 52 mining stocks that I track had at least one buy signal. 42 had at least one sell signal, which means that some whipsawed. These are for swings of 3-5 weeks.

This was the second consecutive week with a majority of sell signals, indicating that the corrective phase that we expected is still under way.

I rescreened the stocks that had at least one buy signal between Monday and Thursday, for repeat buy signals on Thursday and Friday. There were 3. Call me crazy, but I liked all 3 charts enough to put them on the list. They are shown on the table below (subscriber version)..

Over the past week, we started with 2 open selections. They hit their trailing stops and were closed as of that price. The  average gain was 13% with an average holding period of 38 calendar days.  Over the past 3 months including these two, there were 12 picks. 10 were closed with a theoretical profit. Overall, the average profit of the 12 picks was 8.9% with an average holding period of 27 calendar days.

Wouldn’t it be nice if we could annualize that? But we can’t. Our picks are buy side only, and the market often goes months without giving any buys. So it’s difficult to produce consistent profits.

So this week we start anew with 3 picks. No stop prices in the first week. We pays our money and takes our chances, at least at the outset.  Table and charts below (subscriber version).

Subscribers, click here to download the report.

See analysis, table of picks and charts (subscriber version).

The strategy and tactics suggestions in this report are for informational and entertainment purposes, and illustrative of one approach. Nothing in this report is meant as personalized investment advice and you should not construe it as such. No representation is made that it is the best approach, will be profitable, or suitable for you.

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Screens and Picks Keep Buy Side Tilt

Lee Adler

The raw daily data for last week ended with a solid edge to the buy side. The final score for the week was 185 to 71, Buys over Sells. That compared with 187 to 146 Buys over Sells, the week before, and 188-153 in favor of Buys the week before that. The balance has been consistently tilted to the buy side since March 4. We were forewarned, but suspending disbelief was my psychological obstacle. Ideally, I would have gone with more buy picks last week, instead of just a lonely, one.

Technical Trader subscribers click here to download the complete report.

The screen results come from a universe of approximately1200-1500 stocks daily that meet the criteria of trading above $6.00, and with average volume greater than a million shares per day. The final numbers show the number of stocks with at least one buy signal or sell signal during the week.

On Friday, March 18 alone, there were 21 buys and 10 sells. This tilt supports the strategy of staying mostly on the buy side for now.

I screened the lists of previous daily buys and sells from Monday through Thursday. From that output, I looked for additional signals in the progression on Thursday and Friday. The final lists resulted in 9 chart pick candidates on the buy side and 3 on the sell side. I reviewed those visually, and also looked at final signals triggered the week before.

After reviewing those charts, I chose 4 to add to the list (subscriber version only). All were on the buy side. This is a shift from the past 3 months when all picks were on the short sale side until last week. This will leave the list with 2 open shorts, both REITs, and 5 buys.

Last week we started with 7 picks on the list. One was a buy; the rest were short sales. 4 of them hit their trailing stops, and were closed out from the list as of that print. Including those and the picks still open at the end of the week gave us average gains of 5.3% with an average holding period of two weeks. Not bad, but a bit of giveback from the record 10% on an average holding period of 19 calendar days the week before. The percentage gain is based on 100% cash positions, with no margin and no use of leverage or options.

Had I been able to suspend my disbelief that the market might be turning, I would have added more buys last week. But the psychological stumbling blocks still remain, after all these years.

The new picks, along with picks that remain open, and those closed out last week, are shown on the table below (subscriber version only).

Charts of new and open picks are below that

Technical Trader subscribers click here to download the complete report.

The strategy and tactics opinions expressed in this report illustrate one particular approach to trading. No representation is made that it is the best approach, or even suitable for any particular investor.

These picks are illustrative and theoretical. Nothing in this report is meant as individual investment advice and you should not construe it as such. Trade at your own risk. 

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Dog Market Gets the Zoomies

Lee Adler

I have determined that this is no longer a bull market. But neither is it yet a bear market. It’s one of the rarest of rare markets in technical analysis. It is a dog market. And it has the zoomies. It will chase around wildly, but not really go anywhere. This could last for a couple of months.

Technical Trader subscribers click here to download the complete report.

Cycles –  The “weak” 13 week cycle up phase morphed into a meltup, but is still due to top out within  xxxx xxxx (subscriber version).. A new cycle projection points to a target of  xxxx xxxx. If it stops there, or doesn’t get there, the downtrend in the 10-12 month cycle wave would still be intact. However, short term cycle projections point to  xxxx – xxxx.

There are signs that the 10-12 month cycle has bottomed, but this cycle has been dormant, so I am not giving these signs much weight yet.

The 6 month cycle has entered an up phase. The next cycle high is due in  xxxx xxxx  (subscriber version). It’s too soon to tell what shape the up phase will take, but not too soon to say that significant downside is xxxxxx before the summer.

Third Rail Chart – The bottom of a meltup channel rises from around 4300 to 4450 this week. If the SPX stays above that, the meltup remains in force. If it breaks, then look for support between  xxxx and xxxx (subscriber version). Downtrending resistance starts the week at xxxx and descends to xxxx on Friday.

Long Term Weekly-  Parallel channel resistance is around 4460 this week. Break that, and the target would then be xxxx(subscriber version), with room to run to xxxx if that’s broken.

Monthly Chart – The mid March rebound has formed another equal width uptrend channel. Its lower line is around xxxx (subscriber version) in March and xxxx in April. Resistance is around 4650 in March and 4700 in April.

Cycle Screening Measures – The cycle screening aggregate has had a momentum thrust. These almost always mean higher prices to come. The short term and intermediate patterns are now both xxxx (subscriber version). The all-important six month cycle measures are now strongly xxxx. Smoothed measures are lagging and have not yet confirmed the turn. However, they could catch up if the rally continues early in the week.

Technical Trader subscribers click here to download the complete report.

Subscription Plans

Not a subscriber? Get 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. 

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Seven and a Half Weeks of Bullish Liquidity Ahead

Lee Adler

It’s the most bullishful time of the year. The annual corporate tax windfall just hit the US Treasury cash account this week. Individual annual and quarterly estimated taxes will hit on April 18. The Treasury’s coffers will be stuffed with cash, and they will use it to pay down T-bills. They already have begun.

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If you are not a subscriber, click here to get access.

Treasury supply is currently nil on a net basis thanks to big T-bill paydowns over the past week. At the same time, it’s the Fed’s MBS settlement week. Cash is pouring into Primary Dealer Accounts, to the tune of $119 billion this week. $77.5 billion of that already hit on Monday, March 14, and $14.9 billion hit on Thursday, March 17. The rest comes Monday March 21. Pump that much cash into dealer accounts in a few days, with no Treasury supply to be absorbed, and we see the results, a big pop in stock prices.

But they continue to sell bonds.

The markets should experience a hit at the end of March from the downward price pressure of Treasury coupon supply issuance, while the Fed is doing nothing, which suppresses demand. But then a real tidal wave of cash flowing into the market will start in mid April, when individual tax collections come in to the US Treasury, and that should give both the stock and bond markets a boost.

After that, things will get really bad.

This report tells you what to expect, when to expect it, and shows you exactly why (subscriber version).

Subscribers, click here to download the report.

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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!

FREE REPORT – Proof of How QE Worked – Fed to Primary Dealers, to Markets, To Money will help you understand why going in reverse will be a disaster.

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Gold Holdings Consolidated

Lee Adler

Short term cycles have entered down phases and cycles up to 17 weeks are due for a down phase. A consolidation is due before a likely higher high around a projection of xxxx (subscriber version)

Subscribers, click here to download the report.

The high base breakout on long term charts that we’ve been looking forward to is essentially complete, and confirmed by a breakout in long term momentum. The initial conventional measured move target is xxxx (subscriber version).

A long term cycle high is due in xxxx.

In the miners, short term cycles weakened but remained with the two longer cycles on the plus side. The 13 week and 6 month cycles are still near maximum strength. In past bull phases such conditions have lasted for weeks at times. Normally, negative divergences in these numbers would precede price peak in the sector. The weakening short term numbers suggest xxxx a xxxxxxxxxxxxx xx xxx (subscriber version).

Over the  week ended March 11, 27 charts of the 52 mining stocks that I track had at least one buy signal. 40 had at least one sell signal, which means that many swung both ways. These are for swings of 3-5 weeks.

The plurality of sell signals suggests that the rally has run out of steam and needs a rest. I would expect a consolidation or correction and would be less aggressive about adding buys to the list for the next couple of weeks.

I rescreened the stocks that had at least one buy signal from the first part of the week, for repeat buy signals on Thursday and Friday. There was only one, and I wasn’t interested. I added no new picks this week, given the increase in sell signals, plus the additional reason I noted last week. It’s time to step aside.

Table and charts below (subscriber version).

Subscribers, click here to download the report.

See analysis, table of picks and charts (subscriber version).

The strategy and tactics suggestions in this report are for informational and entertainment purposes, and illustrative of one approach. Nothing in this report is meant as personalized investment advice and you should not construe it as such. No representation is made that it is the best approach, will be profitable, or suitable for you.

Subscription Plans

Try Lee Adler’s Gold Trader risk free for 90 days!

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Our Chart Picks Posted Record Gains Last Week

Lee Adler

Last week we had 8 picks on the list, all shorts. 4 of them hit their trailing stops, and were closed out from the list as of that print. Including those and the picks still open at the end of the week gave us average gains of 10% on an average holding period of 19 calendar days. The percentage gain is based on 100% cash positions, with no margin and no use of leverage or options.

This is the best list performance since I began this experiment in 2017. The prior week saw an average gain of 3.3% on 15 picks with average holding period of 10 calendar days.

Previous “best” performances have been a sign to close out, but I will follow the discipline here of merely adjusting trailing stops on the 4 remaining picks. This week I am adding 3 new picks to the list (subscriber version only).

Technical Trader subscribers click here to download the complete report.

The raw daily data for last week ended with a slight edge to the buy side. The final score for the week was 187 to 146 Buys over Sells. That compared with the prior week’s 188-153 in favor of buys.

This is from a universe of approximately1200-1500 stocks daily that meet the criteria of trading above $6.00, and with average volume greater than a million shares per day. The final numbers show the number of stocks with at least one buy signal or sell signal during the week.

The slight edge to the buy side over the past two weeks has not yet been enough to turn the market. It will take much more of a tilt than this to get anything going on the upside. These signals suggest that a choppy rangebound trend remains in force.

On Friday, March 11 alone, there were just 23 buys and 17 sells. Those are low numbers supporting the choppy trading range thesis.

I screened the lists of previous daily buys and sells for the first part of the week, looking for additional signals in the progression on Thursday and Friday. The final lists resulted in 20 chart pick candidates on the buy side and 7 on the sell side. I reviewed those visually. Despite the plurality of buys, the trend structures were weak. There were few setups that looked like good entry points. On the other side, most of the sell candidates were extended near support.

After reviewing all 27 charts, I chose 3 to add to the list, two shorts, and one buy. This was the first buy since one lonely buy on December 6. Other than that, all picks have been on the short side since then. That will leave the list with 6 open shorts and one buy.

The new picks, along with picks that remain open, and those closed out last week, are shown on the table below (subscriber version only). Charts of new and open picks are below that.

The picks that remain open, and those closed out last week are shown on the table below  Charts of open picks are below that.

Technical Trader subscribers click here to download the complete report.

The strategy and tactics opinions expressed in this report illustrate one particular approach to trading. No representation is made that it is the best approach, or even suitable for any particular investor.

These picks are illustrative and theoretical. Nothing in this report is meant as individual investment advice and you should not construe it as such. Trade at your own risk. 

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Weakening Cycle Patterns in Stocks Portend Worse to Come

Lee Adler

Cycles – The 6 month cycle should be in a xxxx xxxx xxxx (subscriber version). Here’s why the next low could entail a short term crash.

The 10-12 month cycle projection now points to xxxx (subscriber version), but there’s still room for it to shift over the next 2 months. Indicators for that cycle are at new lows. A potential positive divergence from the market averages has been obliterated.

Technical Trader subscribers click here to download the complete report.

Short term cycle projections now point to xxxx-xxxx (subscriber version), with lows due between now and the end of March.

Third Rail Chart – Trend resistance begins at 4290 on Monday, descending to 4275 and/or 4240 on Friday. If they clear those, then the next resistance zone and target would be the xxxx-xxxx (subscriber version) area.

On the downside there are multiple support lines from 4200 to 4175 this week, with rising long term channel support at 4150. If xxxx (subscriber version) is broken, it’s game over for the bulls.

Long Term Weekly– Long term cycle momentum has joined 3-4 year cycle indicators in signaling a likely bear market.

Monthly Chart – The market now looks unlikely to return to the uptrend channel. Trend support is around xxxx in March. Long term momentum is on a preliminary sell signal.

Technical Trader subscribers click here to download the complete report.

Subscription Plans

Not a subscriber? Get 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. 

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