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Author: Lee Adler

Patience, Patience! Grrrrrr….

Lee Adler

Technical Trader subscribers click here to download the complete report.

There was only one stock left on the list last Tuesday after the remaining shorts from the week before were closed out from the list on the open. That last one hit its stop later in the week, leaving us empty handed. The 5 picks that were closed averaged a 1.9% gain on a 12 calendar day average holding period.

The raw daily data for last week as a whole tilted strongly to the buy side. For the week ended Friday there were 230 charts with at least one buy signal and 96 with at least one sell signal. On Friday alone, there were 15 buys and 28 sells.

On the four days Monday-Thursday, there were 222 charts with at least one buy signal and 70 with at least one sell signal. This was the universe that I then screened with Friday’s action to find strong candidates to add to the list, whether long or short. Despite the 222 buys leading up to Friday, on that day there were only 7 that had a second buy signal indicating signal progression. I looked at those and didn’t find any appealing. So I sat out the buy side again.

Of the group of 70 with prior sell signals, only two triggered another sell on Friday, and neither was interesting. So no new shorts this week either. Reminds me of the old, “Patience, jackass, patience,” joke that we old fogeys learned in sixth grade. Ha ha.

There are times when a lack of clarity means that it’s just best to sit on your hands and not lose money.

The table of open and closed picks along with charts of open picks are in the report  (subscriber version only).

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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Raggedy Market Has Ambitions

Lee Adler

Technical Trader subscribers click here to download the complete report.

The cycle picture is mixed but leaning toward starting xxxx xxxx xxxx (subscriber version). phase. How far will it get? My guess is “not very.” Nor is there much indication of significant near term xxxx xxxx xxxx (subscriber version).  Just beware if the market is weak early this week. That would suggest structural problems that could lead to xxxx xxxx xxxx . Crashes happen when apparent bottoms drop out.

Here are the particulars.

Cycles are now opposed. The outlook is more bearish if the market xxxx xxxx xxxx (subscriber version). , more bullish if not. The 10-12 month, 6 month, and 13 week cycles all still appear to be xxxx xxxx xxx. The two longer cycles hit initial downside projections, but xxxx xxxx xxxx. The 13 week cycle projection is still xxxx. The 6-7 week and 4 week cycles are in up phases, with a 4 week cycle peak due now.

The 6 month cycle low is ideally due between xxxx xxxx xxxx (subscriber version). Strength early this week would suggest that the 6 month cycle xxxx xxxx xxxx.

Third Rail Chart- The downtrend is intact for now. It would need to clear xxxx this week to break the first downtrend channel. Then subsequently it would need to break xxxx to get something more bullish going. On the other hand, a daily close below xxxx would signal that more declines are likely. A close below xxxx would break a long term uptrend. A close below xxxx would confirm the bear market.

Long Term Weekly- The market made a typical intermediate term bottoming signal by breaking a long term wave channel, then recovering within it. Given the rollover in the 3-4 year cycle indicators, the rebound in the market suggests xxxx xxxx xxxx (subscriber version)

So far, there’s no material change in the long term projections of xxxx xxxx xxxx (subscriber version), but I now believe that they are wrong and will not be met. I’m giving these no weight, and instead focusing on the price patterns, support breaks, and cycle indicators to show us the way.

Monthly Chart – The market now needs to be above xxxx at the end of February to get back into the two uptrend channels. Failure to do that would imply the beginning of xxxx xxxx xxxx (subscriber version). If that does not happen, the target in February would be xxxx xxxx .

Cycle screening measures made a lower high than the December and January peaks, at least so far. The prior low was also lower than the previous one. Therefore the intermediate term pattern xxxx xxxx xxxx (subscriber version) However, other indications are more bullish. The outlook is therefore xxxx xxxx xxxx . If the rally xxxx xxxx xxxx more bullish and that should play out into xxxx xxxx xxxx (subscriber version). If the market declines early in the week, the numbers will turn negative again and confirm the bear market.

The cumulative cyclical breadth index stopped confirming the bull market in August 2020. This shows concentration of buying in fewer and fewer big stocks. Such long periods of negative divergence between market breadth and price indexes often precede bear markets. I will keep you posted on how the pattern is playing out this time.

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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Don’t Be Fooled, The Economy is Still Growing And Still Bearish

Lee Adler

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Withholding Tax collections remained strong in January. A sharp drop in the year to year change was due to an increase in the base of comparison a year ago, and is not a sign of economic weakening. At least not yet.

Withholding collections should be at or near the trough of their usual 2-3 month cycle. So the ADP private payrolls collapse notwithstanding, and regardless of what the BLS says this morning, jobs growth is not decelerating. At least not yet.

But even if the economy is strong and the market must only absorb $80 billion per month of expected new supply versus the $$150 billion -$200 billion per month of the past couple of years, $80 billion is still more than enough to disrupt the markets if the Fed isn’t buying.

Here’s why (subscriber version).

We know that the Fed was usually absorbing or funding about 85-90% of total supply, leaving the market to absorb the rest. That was enough to suppress the 10 year yield at or below 1.3%. At the time, new issuance was averaging around $200 billion per month. So the market was only absorbing $20-30 billion per month, outright. The Fed was buying or funding the rest.

When the debt ceiling was reimposed last year, supply was restricted, but the Fed maintained QE at the same pace. That meant that it was funding more than 100% of supply for a couple of months. That excess cash was sloshing around in Primary Dealer accounts. They put it to use by accumulating, marking up, and distributing stocks to a fevered customer base of institutions, hedge funds, and small traders. That caused the meltup in stock prices.

The arithmetic on Treasury supply versus market demand tells us that the average supply of $80 billion per month is more than the maximum of $30 billion per month that buyers were absorbing directly while holding bond prices stable. In other words, $30 billion in supply was what the market could bear without prices falling and yields rising. The Fed subsidized the rest.

Hence, without Fed buying,we should expect  …. (subscriber version).

And that’s with an expanding economy and growing tax revenues. If the economy contracts on the heels of market dislocations, that will only exacerbate the situation.

In order to absorb the Treasury supply, dealers, investors, and traders must either take on more debt, or liquidate some of their existing holdings, whether Treasuries or stocks. I suspect, based on the evidence of the past two months, that …. (subscriber version). For that reason, I’m focused on selecting swing trade chart picks on  …. (subscriber version). in the Technical Trader weekly reports.

I’ll keep you updated on the developments and outlook. Get the full story in the subscriber version.

Subscribers, click here to download the report.

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Gold is Clueless

Lee Adler

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Gold’s trading range is getting thinner, promoting violent moves within the range.

On the mining stocks, over the past week 33 charts had at least one buy signal and 39 had at least one sell signal. That means that many of the 52 stocks that I track in the sector had whipsaws. I screened each group with prior buy signals for buy signals that triggered on Tuesday. There were 24, which I then gave the eyeball test.

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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Just Wait Till Next Week!

Lee Adler

Technical Trader subscribers click here to download the complete report.

Trailing stops took out most of the chart picks, which were all on the short side. I’ll consider the rest to be covered at the opening price today. The rally took back about half the profit from the previous week. At Monday’s close the average gain was 4% and the average holding period was 9 calendar days. That’s assuming all cash, no margin, no options, no leverage of any kind.

The raw daily data for last week as a whole ripped to the buy side, obviously. For the week ended January 31 there were 209 charts with at least one buy signal and 93 with at least one sell signal. This was the universe that I then screened with Monday’s prices to find strong candidates to add to the list.

On Monday, the unfiltered data gave us 95 buys and 14 sells. Of those, there were only 9 buys and one sell that were in the universe of charts that had rendered signals the week before. On visual review, I did not feel that any of them were worthy of going on the list this week.

As a result, after closing out the remaining shorts we’ll have an almost empty list, with just one remaining short with tight stops.

It will be interesting to see if the market leaves us in the dust, having missed the turn at the low.

Wait till next week!

The table of open and closed picks along with charts of open picks are in the report  (subscriber version only).

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. 

Subscription Plans

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Publication Schedule Note

Lee Adler

The Gold Trader weekly update will again be posted on Wednesday morning this week. It will return to its usual Tuesday posting next week.

Thanks for your patience and support as I get settled in my new home base of Nice, France!

Lee

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Nice Travel Day

Lee Adler

Today is a big day. I’m about to board a flight to Nice, France, where I’ll be making my home, hopefully for many years of sunshine, good health, and the good life of the South of France. Not to mention, good times producing these reports for you! It is the culmination of years of planning and delays, but the day is finally here.

Normally I post the swing trade chart picks on Monday but because of today’s little jaunt, this week I will post that report on Tuesday.

II will see you in Nice!

A plus tard!!

Lee

 

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Stampede of Short Chickens Has Bulls Sniffing Something

Lee Adler

Technical Trader subscribers click here to download the complete report.

We were expecting a short term cycle low by late in the week, at 4275 or so, and we got it.

Support bent. It stretched. It bent some more. But it didn’t break. So the shorts chickened out on Friday and started covering. The last hour was a stampede. There’s nothing more disconcerting than stampeding chickens.

But is it something more? The VIX says it’s an intermediate low, but intermediate cycle indicators say, xxxx xxxx xxxx (subscriber version). This week will be pivotal. Here’s the key.

Failure to xxxx xxxx xxxx  would xxxx xxxx xxxx. 

Cycle projections on the longer cycles point to xxxx-xxxx (subscriber version).

The 6 month cycle low is ideally due between xxxx and xxxx.

Third Rail Chart-  Resistance is around xxxx xxxx. If they clear that, the next target would be xxxx (subscriber version).

If they don’t clear xxxx , then another test of the low is likely. If they don’t xxxx xxxx xxxx (subscriber version), the crash will probably resume, with the next key support around xxxx.

Long Term Weekly- Long term cycle momentum has broken a 2 year uptrend, signaling that the bull market xxxx xxxx .. When long term momentum and 3-4 year cycle momentum break their midyear 2021 lows, and the SPX ends a week below xxxx, then I’d call it a bear market. That would imply that prices are headed a lot lower for a lot longer. We’re not there yet, but we will be quickly if this keeps up like last week.

I have revisited long term cycle projections. Last week’s move suggests more frequent updates than the usual quarterly schedule will be needed on these. So far, there’s no material change in the projections, but I now believe that they are wrong and will not be met. I explain why in the report. I’m giving these no weight, and instead focusing on the price patterns, support breaks, and cycle indicators to show us the way.

Monthly Chart – The market is now below two long term trendlines. It would need to get back above xxxx by the end of January to reverse the bearish implications of this break. If that does not happen, the target in February would be xxxx xxxx. Ouch.

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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Now We Reap the Whirlwind of the Fed’s Malfeasance

Lee Adler

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There’s more evidence in the weekly data on the biggest US banks .of the sea change in psychology and financial conditions that is triggering this bear market environment

The Fed is mandated to control inflation. That means that it has no choice but to follow the conventional economic prescription for doing so. Tight money.

Tight money means death, destruction, and chaos, given how much debt and leverage now overburden the banking system in general, and the Primary Dealers in particular. As they become increasingly stressed, the effect will show up in the markets as lower prices. That will increase the stress, and so on.

The Fed will have its hands tied as long as the CPI and PCE measures remain elevated. Therefore, a resumption and continuation of the crash that has already begun in both stocks and bonds is baked in. It won’t be a straight line. There will be rallies, and they will represent profit opportunities for those willing to short them when they run out of steam.

The big surprise in this data is the evidence that both Primary Dealers and money managers are already hoarding cash. This is a reversal of their past behavior of immediately redeploying cash when speculation and bullishness ruled.

If this is the new mindset, we’re about to reap the whirlwind. Here’s what to do, along with the supporting charts, data, and analysis to help you understand what’s really going on behind and beyond Powell’s tortured dissembling.

Find out what to expect now and what to do about it in this report.

Subscribers, click here to download the report.

Subscription Plans

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 Works – Fed to Primary Dealers, to Markets, To Money

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Good News On Gold

Lee Adler

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The good news is that cycle projections are rising and all point higher. There are also some promising  picks among the miners. We’ve had 3 on the list already, and they’ve been moving up.

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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