Lee AdlerGold broke out of a nice base last week. I’m holding on to our mining picks, except for one that I dropped.
The Treasury Borrowing Advisory Committee (TBAC) is a gang of Primary Dealers and other big investment firms that tells the US Treasury once each quarter how much paper it will need to issue, and when. It provides an estimate of issuance by date and type for the current quarter and the next one. It does so every February, May, August, and November, near the beginning of the month.
The TBAC just issued its reports for the current quarter last week. The report confirms what we expect, a massive supply increase coming. We know exactly when it’s coming, and have a pretty good idea of when it should start to cause problems for the stock and bond markets. With that knowledge, we can now prepare for action to take advantage.
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All cycles have gotten back in gear. The upside could be explosive. This report tells what to look for that would trigger that scenario.
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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.
2/16/21 Every week I run technical stock screens covering all NYSE and NASD stocks trading above $6 and averaging more than 1 million shares a day. This typically results in between 15 and 50 charts to review visually. I’m looking for low risk, high reward price structures, which I’m not smart enough to program into the screening process. But it’s ok. I like to look at charts. 😊
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List performance was stable last week, with the average gain remaining +2.6% on an average holding period of 9 days, down from 12 days the week before. This assumes cash trades, no margin, no options.
4 picks hit stop triggers, leaving 6 on the list. 3 of those are shorts. 3 are longs. I have adjusted stops on all of them.
Here’s the list performance by symbol last week along with updated closeouts, and adjusted stop levels (table in report- subscribers only). Click here to subscribe, 90 days risk free for first time. This assumes cash trades, no margin, no options.
Withholding tax revenues exploded higher in April. Everybody knows the jobs number will be huge. The withholding data says not huge enough. But I’m not here to game that because the BLS makes up the number in the first release then revises it 7 times over 5 years to fit the tax data and unemployment claims data. The BLS survey first release is essentially statistical horseshit.
The April tax windfall is bigger than it looks because the base period was during the US economy’s shutdown last year. However, the total appears to compare favorably with April 2019, until we consider wage inflation. Then the rebound is just back to the April 2019 level.
But momentum is hot, hot, hot. The economic news will be hot, hot, hot. Bond traders will have an excuse to sell. Stock traders will have an excuse to buy. But excuses don’t matter. Money talks. And we follow the money. We know where it is, and where it’s headed. Click here for a 90 day risk free trial to Liquidity Trader Money Trends reports.
Despite the hot momentum of tax collections, spending is hotter, and the deficit is massive. Back of the envelope calculations continue to suggest that the US Treasury will run out of cash in XXXXX (subscribers only). It will then need to radically increase supply. The xxxxx (subscribers only) quarter will then be crunch time for the markets. Click here for a 90 day risk free trial to Liquidity Trader Money Trends reports.
Meanwhile the US Treasury has pumped nearly a half trillion dollars into the accounts of holders of expiring T-bills. Those holders include dealers and big institutions. They deploy that cash to buy longer term Treasuries and, in some cases, stocks. That’s short term bullish for both bonds and stocks. More paydowns are scheduled for the next couple of weeks. Bullish for both asset classes.
The new TBAC supply estimate suggests that the paydowns will end this month. The Treasury will be set to increase issuance in the xxxxx quarter (subscribers only if we extrapolate current flows. Does this mean it will be time to sell in June and prepare for the swoon? Or do we have more time for holdin’ and hopin’? This report has the answers.
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Act on real-time reality!
If gold’s trading feels like an indecisive mess to you, it is because it is. Short term and intermediate cycles are all opposed to one another, and there’s no impetus in either direction. But there have been signs of life in the miners, and we have a few picks to swing.
Cycles are mixed, with all shorter cycles in down phases that are still flat, but could grow teeth. The longer term structures and outlook stay bullish.
Technical Trader subscribers click here to download the report.
Not a subscriber? Follow Lee’s market analysis and outlook, with 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.
2/16/21 Every week I run technical stock screens covering all NYSE and NASD stocks trading above $6 and averaging more than 1 million shares a day. This typically results in between 15 and 50 charts to review visually. I’m looking for low risk, high reward price structures, which I’m not smart enough to program into the screening process. But it’s ok. I like to look at charts. 😊
Technical Trader subscribers click here to download the complete report.
List performance degraded last week, with the average gain dropping to +2.5% on an average holding period of 12 days. That includes open picks and those that triggered stops during the week. Remaining picks are shaky. I have tightened stops.
New for this week, I’ve added 5 shorts and no longs to the list.
This table summarizes recent list performance.
The markets are awash in cash. It shows up on the Fed’s balance sheet. It shows up in the Treasury account, and in Primary Dealer Accounts. It shows up in Reverse Repos.
That cash is coming from the US Treasury’s campaign of paying down T-bills. Those paydowns have totaled $430 billion since February 23. It’s an abomination of market manipulation. But it has worked to stabilize the bond market, levitate stock prices some more, and some more, and some more, and to stave off yet another Primary Dealer collapse.
We can follow these flows via the Fed’s weekly balance sheet statements, and the charts and indicators we derive from it.
The Treasury still has $1 trillion in its account that it must spend down. Annual taxes are still coming in, replenishing that account. The Treasury will almost certainly continue to pay down T-bills until there’s no cash left. I will do a revised estimate of when that will be from the April end of month Daily Treasury Statement. Prior to that, I give my best current swag in this report.
Until then, the cash will continue to flow. This report shows you exactly how this impacts stocks and bonds, so that you know how to play it, and when to GTFO.
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The short term outlook isn’t positive, but the longer intermediate cycles remain on the buy side. There’s just one thing to look out for, and it’s big. Plus, we hold on to two mining picks, and swing with another.
