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Author: Lee Adler

The Dow, Macro Liquidity, and the Fate of Russian Generals

Lee Adler

I began to warn in December 2021 that the process of the CLI flattening was beginning, and that that would lead to bad things happening. Subsequently, the line maintained a steady rise until March 2022 when the Fed ended QE. It’s hard to see on the scale of this chart( I began to warn in December 2021 that the process of the CLI flattening was beginning, and that that would lead to bad things happening.

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So far, those bad things that I predicted have barely scratched the surface of the potential of what’s to come as this line stays flat. The Fed has warned us that it will start shrinking its balance sheet after the May FOMC meeting. That will pull money out of the banking system. That’s when we should start to see really “bad things.”

Meanwhile, the stock market is has reached the low side of its normal band of motion from the CLI. If history is any guide, the stock market will remain vulnerable to further severe declines until a week or two after the line representing the S&P 500 penetrates the bottom of the normal range of motion from the liquidity line.

In 2011, touching the bottom of the band was a bullish signal. But I don’t think that will work today. Back then the Fed was loose and committed to stay loose. Now, it’s in just the opposite posture. They won’t be sending the cavalry to help the stock market any time soon.

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Stocks Are Not Breaking Bad

Lee Adler

We’re on the doorstep of massive T-bill paydowns over the next 4 weeks, that are a bullish influence every year at this time. But stocks aren’t acting like it. Or are they? Surprisingly, cyclical breadth momentum indicators are not acting as badly as the market averages.

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What’s it mean? The market still looks xxxx xxxxx xxxxx (non subscribers click here to access), but that xxxx looks like it will come from xxxx xxxx first. There’s little sign of an immediate collapse, just a xxxx xxxx xxxx xxxxx, then finally, the rally that fools the majority.

Here’s how it should play out (Non subscribers click here to access).

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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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Gold’s Last Chance Before Summer Vacation – LINK CORRECTED

Lee Adler

My apologies! I sent this out earlier this week with a link to the previous weekly report. Now corrected. 

Happy Easter and Happy Passover!

A 13 week cycle upturn is ideally due xxxx xxxx xxxx xxxx (subscriber version) couple of weeks. It’s the best shot at a rally to test that March high before the 9-12 month cycle goes into its usual second half hiatus. The 10-12 month cycle projection of xxxx may still be reached (non-subscribers, click here for instant access).

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A weekly close below xxxx (non-subscribers, click here for instant access) would invalidate the implications of the breakout.

A long term cycle high is due in xxxx.

Swing Trade Screen Picks -Over the week ended April 11, 39 charts of the 52 mining stocks that I track had at least one buy signal. 36 had at least one sell signal. I’d liken that to a close game of ping pong. It remains typical of a consolidation phase.

The signals anticipate swings of 3-5 weeks. But when a market or sector is rangebound, there are lots of whipsaw signals. This is why it’s necessary to look at the charts for the overall pattern.

I rescreened the stocks that had at least one buy signal over the prior 5 day period, for repeat buy signals on Friday and Monday. There were 17. There were 8 repeat sell signals.

Looking at the charts of the 17 repeat buy signals, I was underwhelmed. Too many charts looked like intermediate term tops. At best it looks like more ping pong ahead. But just in case that’s wrong and a breakout is coming, I picked two to add to the list this week to keep a few toes in the water. They were xxxxxx xxxxxxx XXX and XXX.

That will leave 3 picks on the list this week. One pick hit its trailing stop last week. Including that and the one new pick, the average gain was 3.9% on an average holding period of 11 calendar days. 8 picks were closed out in March. The average gain was 10.8% on an average holding period of 27 days.

Since November, after tweaking the screening methodology to use multiple days in making selections, 23 picks have been made and closed out. The average theoretical gain was 7.3% on an average holding period of 31 calendar days. Averages assume 100% cash, no margin, no options. The use of margin or options will magnify both gains and losses.

Table and charts below (non-subscribers, click here for instant access).

Subscribers, click here to download the report.

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. Past performance does not imply future results. 

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Gold’s Last Chance Before Summer Vacation

Lee Adler

A 13 week cycle upturn is ideally due xxxx xxxx xxxx xxxx (subscriber version) couple of weeks. It’s the best shot at a rally to test that March high before the 9-12 month cycle goes into its usual second half hiatus. The 10-12 month cycle projection of xxxx may still be reached (non-subscribers, click here for instant access).

Subscribers, click here to download the report.

A weekly close below xxxx (non-subscribers, click here for instant access) would invalidate the implications of the breakout.

A long term cycle high is due in xxxx.

Swing Trade Screen Picks -Over the week ended April 11, 39 charts of the 52 mining stocks that I track had at least one buy signal. 36 had at least one sell signal. I’d liken that to a close game of ping pong. It remains typical of a consolidation phase.

The signals anticipate swings of 3-5 weeks. But when a market or sector is rangebound, there are lots of whipsaw signals. This is why it’s necessary to look at the charts for the overall pattern.

I rescreened the stocks that had at least one buy signal over the prior 5 day period, for repeat buy signals on Friday and Monday. There were 17. There were 8 repeat sell signals.

Looking at the charts of the 17 repeat buy signals, I was underwhelmed. Too many charts looked like intermediate term tops. At best it looks like more ping pong ahead. But just in case that’s wrong and a breakout is coming, I picked two to add to the list this week to keep a few toes in the water. They were xxxxxx xxxxxxx XXX and XXX.

That will leave 3 picks on the list this week. One pick hit its trailing stop last week. Including that and the one new pick, the average gain was 3.9% on an average holding period of 11 calendar days. 8 picks were closed out in March. The average gain was 10.8% on an average holding period of 27 days.

Since November, after tweaking the screening methodology to use multiple days in making selections, 23 picks have been made and closed out. The average theoretical gain was 7.3% on an average holding period of 31 calendar days. Averages assume 100% cash, no margin, no options. The use of margin or options will magnify both gains and losses.

Table and charts below (non-subscribers, click here for instant access).

Subscribers, click here to download the report.

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. Past performance does not imply future results. 

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Primary Dealers Still Long and Wrong, But A Gift Rally Looms!

Lee Adler

After a disastrous couple of months in the bond market, conditions are now set up for x xxxxxx  there. Treasury bill paydowns will be enormous over the next month. No one expects this, because the market has been so horrible, and the Fed is so tight and will soon get even tighter. But the markets will be xxxx xx xxx from these Treasury paydowns. They’ve already started, and they will surge to enormous levels over the next 2-3 weeks.

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So what would I do with this information? The same thing I’ve been doing for the past 20 months. They’re gifts to us on the way to Dante’s Inferno. If I owned bonds, I would xxx xxxx. If I owned stocks, I would xxxx xxxx. And I would keep looking for stocks to xxxx on the xxxxxx.

I know. Cash is trash when inflation is high and interest rates are negative to inflation, but it’s less trashy than assets that are actively losing value. The strategy that I think makes the most sense in such an environment is to trade stocks from the xxxx side. I publish the weekly swing trade chart picks for those who are looking for ideas along those lines.

Meanwhile, the Primary Dealers are STILL positioned wrong. They’ll get this little rally in the short run to help salve their wounds. But I stress – short run.

Dare I say, “Sell in May and go away?” But make that the xxxx xx xxxx. The Treasury paydowns should continue lubricating the market well xxxx xxxx xxxx.

The problem after that is that the Primary Dealers and the biggest banks who own them have enormous hidden losses that aren’t showing up yet on bank earnings statements or balance sheets. As market conditions tighten in the second half of this year and margin calls beget losses, which beget more margin calls, those hidden losses will start to show up. Banks will be forced to liquidate some of their assets and will be forced to report some of those losses.

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Swing Trade Chart Picks Maintain Sell Side Tilt

Lee Adler

Last week’s daily screens tilted to the sell side again. The final score for the week was 125 Sells to 82 Buys. This was the third straight week with a plurality of sells. Prior to this 3 week run, buy signals had held the edge for 3 weeks.

On Friday April 8 alone, there were 11 buys and 41 sells, portending a soft start for this week.

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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.

I start the weekly process by screening for daily buys and sells from Monday through Thursday. I then rescreen that output, for additional signals in the progression on Thursday and Friday. The final lists this week resulted in 8 chart pick candidates on the buy side and 15 on the sell side.

I reviewed the charts from the final output visually. From that review, I chose 1 buy and 2 shorts to add to the list, shown on the table below (subscriber version).

Last week we started with 9 picks on the list. 5 were buys, 4 were short sales. Three picks hit their trailing stops and were closed as of the stop price. 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 11 days.

Picks closed out in March had an average gain of 4% with an average holding period of 20 calendar days. The percentage gain is based on 100% cash positions, with no margin and no use of leverage or options. The use of leverage and options will magnify both gains and losses.

Likewise, it would be nice if we could annualize these numbers, but reality doesn’t work that way. Some months have what traders euphemistically call “drawdowns” — losses by any other name.

This week we will start with 9 picks on the list including the 3 new ones. 3 are buys. 6 are shorts.

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.

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There are Profit Opportunities in a Rangebound Market

Lee Adler

Big T-bill paydowns are coming in the second half of April. That will continue to support a “rally that fools the majority.”

But it doesn’t guarantee it. We’ll let the market do the talking, based on what it does with these key support and resistance levels (subscriber version).

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Cycles – There’s no thrust in either direction. Cycles are likely to remain in juxtaposition for the next couple of months. It’s a recipe for a xxxxxxxxxx xxxxxxx (subscriber version).

That doesn’t mean that there’s nothing to do. Some stocks will make swing moves, whether up or down. The swing trade chart pick screens should be able to pick some of them out.

Third Rail Chart – The trendline to watch starts the week at xxxx (subscriber version) and ends at xxxx. A daily close below that line would invalidate wider uptrend hypothesis. A daily close below xxxx would be needed to signal a new short term downtrend.

If the uptrend channel holds, look for resistance around xxxx first. If that’s cleared, the next likely target would be resistance around xxxx.

Long Term Weekly– The February-March lows appear to have been a two year cycle low. That only tells us that an up phase is due. It does not tell us the absolute direction of that up phase. That depends on the longer cycles.

The 3-4 year cycle is in a top phase, but it still has an unmet projection of xxxx (subscriber version) that can’t be ruled out until the top breaks down. That would require a weekly close below xxxx.

A 7 year cycle top is due this year in a projection range of xxxx– xxxx. It’s not yet possible to say whether the top is complete or a new high is still on the docket.

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 – These indicators were mixed and neutral in the short run, xxxxxxxxxx xxxxxxx (subscriber version) for the intermediate term. They still support the liquidity analysis based thesis of a xxxxxxxxxx xxxxxxx (subscriber version) that could last into mid May.  

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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The Iron Pyrite Trade

Lee Adler

Gold has lost its shine, and it looks to be dull for a while. The 10-12 month cycle projection of xxxx(subscriber version) has been hit. Another attempt to reach that level may or may not lie ahead over the next two months, but it is unlikely to be topped for many months to come. In the near term, opposed cycles are likely to lead to more xxxx xxxx xxxx.

Subscribers, click here to download the report.

A weekly close below xxxx (subscriber version) would invalidate the implications of the breakout.

A long term cycle high is due in xxxx.

Swing Trade Screen Picks -Over the week ended April 4, 42 charts of the 52 mining stocks that I track had at least one buy signal. 20 had at least one sell signal. So there were several whipsaw charts with signals on both sides. This is typical of a consolidation phase.

The signals anticipate swings of 3-5 weeks. But when a market or sector is rangebound, there are lots of whipsaw signals. This is why it’s necessary to look at the charts for the overall pattern.

I rescreened the stocks that had at least one buy signal over the first 4 days of the period, for repeat buy signals on Friday and Monday. There were 29. There were 9 repeat sell signals. Overall that’s bullish for the short term outlook for the group.

However, when I looked at the charts, I was disappointed. While there were plenty of short term buy signals, the intermediate term cycle structures weren’t great. In fact, they were troubling. Try as I might, I only found one chart that liked enough to add to the list. That goes along with the one that wasn’t stopped out last week, to leave us with only two long picks. If the sector takes off, we’ll have a toe in the water, but not a full load. On the other hand, if it tanks, we won’t get hurt.

Table and charts below (subscriber version).

Subscribers, click here to download the report.

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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Holding Longs, Adding Shorts

Lee Adler

Last week’s daily screens tilted away from the buy side and toward the sell side for a second straight week. The final score for the week was 254 Sells to only 45 Buys. The previous week it was 122 to 51, Sells over Buys.   Prior to that, the balance had consistently tilted to the buy side since March 4.

3/28/22 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.

This weekend was a different story. I found 4 charts that I liked enough to add to the list as short sales.

Technical Trader subscribers click here to download the complete report.

On Friday, April 1 alone, there were 10 buys and 46 sells, despite a bit of a recovery in the market averages.

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.

I start the weekly process by screening for daily buys and sells from Monday through Thursday. I then rescreen that output, for additional signals in the progression on Thursday and Friday. The final lists resulted in zero chart pick candidates on the buy side and 26 on the sell side.

I found that surprising, but I’ve learned not to argue with the numbers. Most of the time they foreshadow what’s coming pretty accurately.

I reviewed the charts from the final output visually. From that review, I chose 4 shorts to add to the list (subscriber version only).

Adding those picks this week leave the list with 5 open buys and 4 shorts. It suggests a transitional or mixed market without a strong trend.

Last week we started with 8 picks on the list. All were buys, no shorts. Three picks hit their stops and were closed as of the stop price. Including those and the picks still open at the end of the week gave us average gains of 3.4% with an average holding period of 10 days. That compared with an average gain of 2.0% and average holding period of one week in the previous 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 (subscriber version only). Charts of new and open picks are below that.

Technical Trader subscribers click here to download the complete report.

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Market Still in “Fool The Majority” Mode

Lee Adler

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

Short term cycles and the 13 week cycle may have peaked, but there’s no sign yet of a xxxx xxxx (subscriber version). The down phases could xxxx xxxxxxxx  xxxxxxxx xxxx in the 6 month cycle up phase. The S&P would need to drop below xxxx to turn the down phase into something more damaging.

Technical Trader subscribers click here to download the complete report.

Third Rail Chart –  Friday’s rebound may have set up a new uptrend channel. A down day Monday would invalidate that thesis, but a solid up day would confirm it.

If the verdict is down, the first place to look for support would be around xxxx. The deeper such a move would go, the more likely it would be to be a resumption of the primary downtrend.

On the other hand, a rally through xxxx would reaffirm the meltup, which would then probably target a full test of the December high.

Long Term Weekly– The February-March lows appear to have been a two year cycle low. That only tells us that an up phase is due. It does not tell us the absolute direction of that up phase. That depends on the longer cycles.

The 3-4 year cycle is in a top phase, but it still has an unmet projection of xxxx (subscriber version) that can’t be ruled out until the top breaks down. That would require a weekly close below xxxx.

A 7 year cycle top is due this year in a projection range of xxxx– xxxx. It’s not yet possible to say whether the top is complete or a new high is still on the docket.

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 signals weakening short term momentum, but xxxx (subscriber version) for the intermediate term. The same is true for the 6 month cycle measures, the 29 day MA, and the cumulative line.

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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