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Don’t Be Surprised, or Fooled, By a Rigor Mortis Rally

Lee Adler

Technical Trader subscribers click here to download the complete report.

The stock market is again at a fulcrum. It may or may not have one more rigid upright position left in its dying body. Don’t be surprised if it does. And don’t be fooled into thinking it’s a new upleg.

Third Rail Chart-  The S&P remains within uptrend channels. The most important support line runs from xxxx to xxxx (subscriber version)  this week. That would need to be broken to signal a downside reversal.

Cycles – The 10-12 month and 6 month cycles now appear to be in synchronized xxxx xxxx (subscriber version). But there’s still a yet to be negated 6 month cycle projection of xxxx. The 13 week cycle remains in an up phase for now, with a projection of xxxx. But short term cycles have entered down phases, with projections of xxxx to xxxx . If that is reached, would probably negate the 13 week cycle projection.

Liquidity is turning bearish, but it will be a gradual process that would allow for possible extension of the stock market rally consistent with the above projections.

Long Term Weekly- SPX would need to end a week conclusively below xxxx(subscriber version)to signal the likely start of a bigger top.

Long term cycle projections point to xxxx to xxxx (subscriber version) ideally due this year. 

Monthly Chart – S&P remains in a narrow uptrend channel with resistance at xxxx (subscriber version). Above that is room to run to xxxx this month.  It would need to end the month below xxxx to break the uptrend and open a chasm to the next support around 4000.

Cycle screening measures are at yet another inflection point. They need a solid xxxx xxx to turn the picture bearish, and a big up day to suggest a stronger bullish trend. Small moves would leave the status quo of a choppy uptrend in place.

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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Breakout Under Way!

Lee Adler

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We have some consequential new data in the past few days since I posted the QE/Treasury supply update on January 3. Treasury yields are breaking out. The RRP slush fund has reversed, and T-bill issuance is continuing at a breakneck pace. An initial jobs report shows tremendous growth, as foretold by the daily withholding tax data.

The ADP private payrolls data was released yesterday, and it accurately reflected what the withholding tax data for December already told us— that jobs growth is still going strong, or even accelerating. Whether the BLS Nonfarm Payrolls farce release on Friday shows this or not is anyone’s guess. You know the truth.

The US economy is going gangbusters, but the Fed has created and is imminently facing the greatest crisis in its history.

Here’s the latest in this ongoing financial soap opera for the ages.

Get the full story in the subscriber version.

Subscribers, click here to download the report.

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

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When Boring Isn’t Bullish – Gold

Lee Adler

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Gold Boring trading ranges are often long term bullish. But this is gold. Cycles remain mixed with still no sign of an imminent breakout from the trading range. Short term, the most likely direction is xxxx xx xxxxx (in subscriber version).

On the very long term monthly chart, gold nears the end of December at a critical trend area around 1790. If it ends January below that, it’s in danger of falling into the xxxx  xxxxx (in subscriber version).

HUI – HUI remains locked in a range with no sign of an imminent breakout. A 13 week cycle up phase is flat and is ideally due to last xxxx xx xxxxx (in subscriber version). There’s no sign that longer cycles will xxxx xx xxxxx (in subscriber version).  A 10-12 month cycle high is ideally due between xxxx xx xxxxx.  If there’s no upside breakout before that, the rest of the year would set up xxxx xx xxxxx.  On the long term weekly chart HUI is holding precariously at the 6 month cycle MA. xxxx xx xxxxx are the parameters to watch this week for signs of big trouble.

On the ultra long term monthly chart HUI remains entrenched in a 16 month downtrend. Ultra long term momentum remains precariously neutral. If HUI ends December below xxxx (in subscriber version) the target could be xxxx–xxxx in the first quarter of 2022. Even if above xxxx, it would still face major resistance in the xxxx range. It would need to break that to end the downtrend.

Chart Picks – Two weeks ago, we added 3 picks to the list, and they’ve done ok as shown in the table below.

Today, there were 4 buys and 31 sells from the swing trade screens of 52 gold mining stocks from Monday’s action. The rest had no signal. The big edge to the sell side isn’t a good sign. Even the 4 charts with buy signals weren’t inspiring. So I added no new picks.

Because of the weakness in the screening data and the fact that most stocks remain in longer term downtrends. I’ve added tight stops to the existing picks.

Picks closed out over in November-December had an average gain of 10% on an average holding period of  46 calendar days.

See table and charts (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.

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Wheels Are Moving in Slow Motion for the Top

Lee Adler

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The debt limit has been raised. The Treasury has flooded the market with supply, and will continue to do so for another month or two. But there’s been no disaster in the market. The Fed’s RRP slush fund, designed to absorb the flood of supply, has even grown, thanks to year end window dressing.

Even after that window is undressed this week, there will still be around $1.6 trillion in that fund to start. That is overnight liquid money that holders will use to buy new Treasury issuance. The RRPs will gradually be drawn down. But there’s enough there to absorb the ongoing supply bulge that the government needs to issue to rebuild its cash and repay the internal accounts it raided while the debt limit was in place.

We don’t know exactly how much more the government needs to get its internal accounts back to normal, but it could achieve that purpose very quickly given the availability of the RRP fund. It holds more than enough cash to fund that issuance.

That RRP fund, with it’s baseline starting point of approximately $1.6 trillion also gives the Fed cover to wind down QE to zero in March. The Fed will cut QE, and everything will look hunky dory. Wall Street will conclude that “tapering” QE was no big deal. Market complacency will be thick. Get out your carving knives.

Once the Fed has cut QE to zero, and RRP holders decide that they will spend no more to support the market, is that when the crisis begins?  No, not immediately.

First, there will be the annual tax windfall that occurs in March and April, when corporate and individual income taxes for the preceding year come in. The Treasury always uses that cash to temporarily pay down outstanding debt. The holders of that debt get money back. They use that cash to buy longer term paper, and in some cases to buy stocks. So we get a seasonal rally every year in March and April.

But in late May, the Treasury starts net borrowing again. Then we watch. We watch to see how that RRP fund is doing. Once it turns flat, and there’s no more QE, and the seasonal tax windfall cash has been spent, that’s when the trouble starts in the market.

Sell in May and go away? This report tells you why that might be a good idea. The report shows what to expect for both stocks and bonds, along with the why’s and wherefores, likely timing, to give you a clear grasp on on a strategy and tactics that might make sense for you.  Get the full story in the subscriber version.

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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It’s The Most Blunderful Time of the Year

Lee Adler

Technical Trader subscribers click here to download the complete report.

In the last episode of how the trading cookie crumbles before the pre-holiday break, I asked the age old question, “Is it time to quit if your chart picks crushed the market?” The answer, of course, is, “Yes.” But I did not heed. I took the time off nearly fully short, with no stops on new picks, and now must find the best way to extricate from these trades and minimize the losses that wiped out a good part of the previous month’s gains.

Prior to Christmas, the previous Friday’s screens had 24 buys and 72 sells. So I went into the holiday period overconfident that I’d be sitting pretty with all shorts.

In the Christmas week, which I took off, the last screen before the holiday had 67 buys and 16 sells.

That should have been the takeout signal for the shorts. Unfortunately, I was enjoying a little vacation, and working on my French long term stay visa application. In other words, asleep at the switch.

So now the question is, given where these picks now stand on their charts, what’s the best course of action. This Friday’s screens had 16 buys and 34 sells.

After reviewing the charts, I decided that rather than bail immediately on the shorts, I want to give them just a tad more rope, because there seems to be some potential for a pullback. At the same time, I want to set my stops at a level where it would be appropriate to abandon hope, all ye fools who enter there. So the list now has tight stops on all picks.

The charts of the current screen output are mostly trendless, jiggly, and muddy. I saw nothing compelling either as a buy or a short, so I’m adding nothing to the list this week.

The list now has 8 open picks, ending the week with an average loss of 0.8% on an average holding period of 29 calendar days. That wiped out a gain of 5.8% on an average holding period of 22 calendar 2 weeks earlier.

The table and charts of open and new picks are below (subscriber version only).

Table (subscriber version only)

Charts (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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The Rigor Mortis Stock Market Rally

Lee Adler

Technical Trader subscribers click here to download the complete report.

In the long run, we’re all dead, and so is this bull market, whose end is ideally due this year. But in the short run, it still has room to run. We must give the uptrend the benefit of the doubt until there’s more hard evidence that a turn is under way.

Third Rail Chart- The S&P is trading near the center of a short term uptrend channel. The first support line rises from xxxx to xxxx (subscriber version) this week. A second line is just below that. The S&P would need to break both lines to have a shot at a downside reversal.

Cycles The 10-12 month and 6 month cycle tops are ideally due any time between now and xxxx  xxxxxx xxxx (subscriber version). Cycle projections now point to highs of xxxx to xxxx.

The 13 week cycle is in an up phase ideally due to top out xxxx to xxxx (subscriber version). The cycle projection is xxxx, which is an outlier at this point. The 13 week and 6 month cycle up phases would remain in force as long as the market stays above xxxx.

Short term cycles have projections of xxxx to xxxx (subscriber version), and are due to top out in January.

Cycle Screening data is at an inflection point. The current negative divergence between these indicators and the market averages doesn’t mean much yet. It only will if there’s downside follow through this week. Otherwise, the benefit of the doubt still goes to the bullish case. 

Liquidity is turning bearish, but it will be a gradual process that would allow for extension of the stock market rally consistent with the above projections.

Long Term Weekly SPX would need to end a week conclusively belowxxxx (subscriber version) to signal what could be the start of a bigger top.  

New long term cycle projections point to xxxx to xxxx (subscriber version) ideally due xxxx  this year.   

Monthly Chart – In the clear for a run to xxxx to xxxx (subscriber version) in January. It would need to end the month below xxxx (subscriber version) to break the uptrend.

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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Holiday Wishes and Publication Schedule

Lee Adler

I want to wish you and your family Merry Christmas, Happy New Year, Happy Holidays, and Happy Festivus, the holiday for the rest of us.

I will celebrate by looking around Warsaw for an open Chinese restaurant where I can get takeout. I won’t be eating in this year (I wonder why).

Today at Malbork Castle, Malbork, Poland
Today at Malbork Castle, Malbork, Poland 12/22/21 

I want to thank you especially for allowing me the privilege of doing this work that I love, for you for the past 21 years. Whether you’ve been a subscriber for the past 21 days, but especially if you’ve been around for most or all of those years, your interest and confidence in me is a gift that I always appreciate! I hope that you enjoy and learn nearly as much from my reporting as I do from doing it.

I know that you will probably be enjoying the coming days with your families and hopefully not paying much attention to the markets. I’ll use that opportunity to take a break myself over this week. There will be no Liquidity Trader, Technical Trader, or Gold Trader posts between now and New Years weekend. Regular publication will resume in the New Year, with a bevy of reports. So be sure to stay tuned for that.

If anything strikes me as noteworthy over the coming week, I’ll throw up some quick comments on the Capitalstool message board and in my Twitter feed.

So to you and yours, Happy Holidays! See you in the New Year!

Lee

PS. I apologize for the fact that if you subscribe to more than one of the services, you have gotten this email once for each of them.  Sorry for clogging the inbox! 😁

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Gold Shows Every Sign of Doing This Now (and Forever)

Lee Adler

Subscribers, click here to download the report.

Gold shows all the signs of going nowhere fast. Cycles are juxtaposed and the price is locked in a tight range. The 13 week cycle is due for an upturn in the next xxxx (in subscriber version), which would be conducive to a run to at least xxxx, but it would need to clear xxxx to get a real bull move started.. A breakdown below xxxx would be a bearish sign as it would complete a head and shoulders top pattern with a measured move target of around xxxx.

On the very long term monthly chart, gold nears the end of December at a critical trend area around 1790. If it ends January below that, it’s in danger of falling into the xxxx (in subscriber version).

HUI – The 13 week cycle appears to have joined shorter cycles in an up phase. It’s ideally due to last 6-10 weeks but is due to remain flat. There’s no sign yet that longer cycles will turn xxxx (in subscriber version), .  On the long term weekly chart HUI is holding precariously at the 6 month cycle MA.

On the ultra long term monthly chart HUI remains entrenched in a 16 month downtrend. Ultra long term momentum remains precariously neutral. If HUI ends December below xxxx (in subscriber version). The target could be xxxx–xxxx in the first quarter of 2022. Even if above xxxx, it would still face major resistance in the xxxx range. It would need to break that to end the downtrend.

Chart Picks – There are 11 buys and 2 sells from the swing trade screens of 52 gold mining stocks from Tuesday’s action. The rest had no signal. I looked at the charts, and, in a change from recent weeks, there were 3 charts where I liked the setups. I’ll start tracking them as buys as of this morning’s open.

New Buys: xxxx, xxxx, xxxx, (in subscriber version).

There were no open picks over the last week as the last one had been stopped out. Picks closed out over the past month had an average gain of 10% on an average holding period of  46 calendar days.

See table and charts (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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Gold Trader Publication Schedule Note December 21, 2021

Lee Adler

This report will be posted on Wednesday morning, December 22, instead of Tuesday this week. I’m  traveling today.

See you Wednesday! And if I don’t see you before, Merry Christmas and happy holidays! Thanks for your support!

Lee

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Is It Time to Quit if Your Chart Picks Crushed the Market Last Week?

Lee Adler

Technical Trader subscribers click here to download the complete report.

This Friday’s screens had 24 buys and 72 sells. That compares with the previous Friday’s 15 buys and 9 sells.

I concluded last week that the small number of signals, particularly buy signals suggested that the rally was exhausted, despite the buys having the edge. I chose not to add any charts to the list, long or short, but held on to all of the shorts that had been on the list.

That looks to have been the correct judgement.  The list had 8 open picks, ending the week with an average gain of 5.8% on an average holding period of 22 calendar days, i.e. 3 weeks and a day. That’s the second best weekly performance of the last month and one of the best since I began this exercise a couple of years ago. It was up from +3.1% and 15 days the previous week.  This is cash basis, no leverage.

By contrast the S&P 500 lost 1.7% over the past 22 days and nearly 2% last week.  Maybe we should follow the old adage, quit while you’re a head, because you never know what might be a foot. Especially when it comes to the TA and the market. Sometimes the TA beats the market, and sometimes the market kicks your ass.

Which is why your trading strategy needs to include a mechanism to minimize losses, or what traders euphemistically call “drawdowns.” Mine is to avoid stops initially, but to minimize risk by spreading it across multiple picks, with the expectation that one or two will run big –  enough to offset the Biggest Loser. It’s not glamorous, but it works.

I then use trend support and resistance based picks to close out picks as they mature.

This week, 1465 stocks met the initial screening criteria. 6.6% of them rendered signals on Friday, which above the average 3 to 5%. 4.9% of the stocks that met the minimum criteria had sell signals. That is also a significant number, but indicates neither thrust, norm maximum momentum. So staying mostly short looks like the way to go this week, but as existing picks have aged a bit it’s time to tighten some of those stops and protect profits.

After reviewing the charts from the screen, I’m adding 5 of them to the list this week, all on the short side. That will bring the list to a full complement of 13 picks, only one of which is long.

I have updated the stops on some of the picks and added a stop to the one long pick. The rest of the stops remain in place. As usual, I’ll roll the dice on the new picks, give them a chance to breathe, and let them ride for at least this week.

The table and charts of open and new picks are below (subscriber version only).

Table (subscriber version only)

Charts (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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