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Tepid Tax Collections Mean It’s the Supply

Lee Adler

Which stupid Wall Street is finally starting to recognize. You would think that after 3 years of a bond bear market they would have understood sooner. This reminds me of the markets of the late 1960s and 70s where I cut my teeth in this business. Every broker on the planet was shilling bond funds and the new fangled REITs as they all went to hell in a handbasket. Non-subscribers, click here for access.

Subscribers, click here to download the report.

Withholding tax collections strengthened a bit in recent weeks, but not enough to narrow the deficit and meaningfully reduce the flow of Treasury supply. That supply has been gargantuan over the past month. That has caused the market to liquidate both stocks and bonds to absorb the new supply.

That should moderate somewhat in the next few months, but not enough to change the long term bearish outlook. This is an ongoing catastrophe whose effects have begun to show up across all asset classes as leveraged portfolio losses lead to liquidation pressures. Holders of leveraged bonds portfolios are forced to sell not only bonds, but stocks and whatever else they can get their hands on. It has had a deflationary pressure on asset prices.

In this report we look at the charts and the data to explain what’s coming so that you’ll understand what to do about it.

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Screen Picks – Definition of Insanity Exemplified

Lee Adler

For a change, the screens produced more charts for final visual review on the buy side than the sell side, with 42 buys and 38 sells based on Friday’s output. The score was even more lopsided using data through Thursday with 71 buys and just 18 sells. Non-subscribers click here for access.

Technical Trader subscribers click here to download the complete report.

From Friday’s group I chose 10 that I liked enough to add to the list. 3 of those are conditioned on a limit price as shown on the table below. The other 7 will be added based on Monday’s opening price and we’ll track them from there. There were no shorts. Non-subscribers click here for access.

Three of the existing picks hit stops last week. They’re out as of the first price after the stop. Another was closed as of Tuesday’s open, as I had placed a sell note on it last week. With the new additions, assuming limit conditions are hit, there will be 20 active picks. Only one is a short. Non-subscribers click here for access.

I added or adjusted stops on 4 existing picks. New picks will have no stop indications initially. Non-subscribers click here for access.

9/11/23 I assume risk mitigation through diversification and small position sizes. However, because the list is now long only, there’s market risk is high, given the principle of synchronicity. Non-subscribers click here for access.

Expecting a 6-month cycle low in the past couple of weeks led me to have a bullish bias in selecting swing trade picks from the screens. I focused on the buy side and ignored the sell side. The result was that September was the worst month for list performance going back at least a year with an average loss of 3.3% on an average holding period of 20 calendar days. That virtually cancelled August’s average gain. Non-subscribers click here for access.

9/26/23 I missed a big opportunity on the short side over the past month. Unfortunately, the decline has aged to the point that it is probably too late to be looking to add shorts. So I continue to be on the lookout more for buy side opportunities. Non-subscribers click here for access.

The riddle lies in whether this might be the first leg of a new cyclical bear market. In that case, the downside may persist longer than has been the case over the past year. So, as I reviewed the screen output I wanted to be open to good sell side setups too. Non-subscribers click here for access.

9/5/23 Picks closed out in August had an average theoretical gain of 3.7% on an average theoretical holding period of 26 calendar days, just under 4 weeks. With the revised methodology, I’d like to see that stretched out a bit more. Non-subscribers click here for access.

8/7/23 July had been difficult. After starting off with a string of losses on closed picks, the month ended at dead breakeven on the basis of a good last two weeks. Just 59% of the picks were winners, and the result was only a breakeven. I marvel at those options tout services who report 1000% gains month after month. But I wonder why they don’t own the world.

7/10/23 June was solid, with 25 picks closed at an average theoretical gain of 9.7% on an average holding period of 36 calendar days. Non-subscribers click here for access.

9/26/23 I missed a big opportunity on the short side over the past month. Unfortunately, the decline has aged to the point that it is probably too late to be looking to add shorts. So I continue to be on the lookout more for buy side opportunities. Non-subscribers click here for access.

9/26/23 The riddle lies in whether this might be the first leg of a new cyclical bear market. In that case, the downside may persist longer than has been the case over the past year. So, as I reviewed the screen output I wanted to be open to good sell side setups too. Non-subscribers click here for access.

Table of picks and performance in the subscriber report. Non-subscribers click here for access.

Not a subscriber? Get price and time targets, and weekly swing trade chart picks, risk free for 90 days! 

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. This is a developmental and experimental exercise, for the purpose of providing experienced chart traders with ideas and concepts to use or not use as they see fit.

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

The public facing report is not the complete report. Only subscribers have access to the full report and regular tracking of the theoretical picks and closeouts made in the reports.

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On the Lookout for Big Low

Lee Adler

There were more hints of a xxx xxxx xxxxx low last week, but hints do not a bottom make, especially if this is a new bear market. Some signs point that way.

Here’s what to look for. Non subscribers click here to access.

Technical Trader subscribers click here to download the complete report.

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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Gold on the Brink of Secular Trend Sell Signals

Lee Adler

There are signs that this decline will result in a breakdown. And that’s not the worst of it.  Non-subscribers click here for access.

Subscribers, click here to download the report.

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

The strategy and tactics suggestions in this report are informational and general in nature, and illustrative of one approach. They are not investment advice. No representation is made that it is the best approach, will be profitable, or even suitable for any particular investor.

Nothing in this letter is meant as personalized investment advice and you should not construe it as such. Trading involves risk of loss, and in the case of options, the loss can be 100% of the amount invested. Any trading that you do with reference to strategies and tactics suggested in this report should be done only after consulting with your financial adviser. Trade at your own risk. 

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Screen Picks – Still Longing for a Bottom

Lee Adler

Expecting a 6-month cycle low in the past couple of weeks led me to have a bullish bias in selecting swing trade picks from the screens. I focused on the buy side and ignored the sell side. That was a mistake with a cost, with the list showing an average loss of 2.8% with a average holding period of 20 calendar days through Monday. Last week I had added stops to most of the list, and most of those got hit. That left only 5 open picks for the coming week. Non-subscribers click here for access.

Technical Trader subscribers click here to download the complete report.

I missed a big opportunity on the short side over the past month. Unfortunately, the decline has aged to the point that it is probably too late to be looking to add shorts. So I continue to be on the lookout more for buy side opportunities. Non-subscribers click here for access.

The riddle lies in whether this might be the first leg of a new cyclical bear market. In that case, the downside may persist longer than has been the case over the past year. So, as I reviewed the screen output I wanted to be open to good sell side setups too. Non-subscribers click here for access.

There were numerous charts to visually review with an output of 76 on the buy side and 89 on the sell side. There were numerous whipsaw signals with charts showing up on both ledgers. Again, the sells already appeared to have run their course. I found only one chart that I liked enough to add on the sell side. Non-subscribers click here for access.

Conversely, I liked 6 on the buy side. This may be the definition of insanity after getting it wrong repeatedly over the past 3 weeks. But as time goes on the odds grow that the 6-month cycle upturn will show up sooner rather than later. The charts I reviewed led me to go with that probability. Non-subscribers click here for access.

The changes made this week will leave the list with 11 longs and just one short as shown on the table in the report.  Non-subscribers click here for access.

Technical Trader subscribers click here to download the complete report.

 

Not a subscriber? Get price and time targets, and weekly swing trade chart picks, risk free for 90 days! 

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. This is a developmental and experimental exercise, for the purpose of providing experienced chart traders with ideas and concepts to use or not use as they see fit.

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

The public facing report is not the complete report. Only subscribers have access to the full report and regular tracking of the theoretical picks and closeouts made in the reports.

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Prime Time for Danger and Opportunity

Lee Adler

It’s time for a 6-month cycle low, but bottom windows are also periods of heightened crash potential. The next couple of days are pivotal. Here’s what to look for. Non subscribers click here to access.

Technical Trader subscribers click here to download the complete report.

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 Rhymes of History

Lee Adler

I’m thinking in particular of the late 1960s to 1982, the era when I got my start in this business. It was a time of high inflation, tight money, rising interest rates and bond yields, and falling bond prices.

Sound familiar?

I want to replay comments from the August 16 update because they are important context.

Subscribers, click here to download the report.

8/15/23 Liquidity analysis provides context, and some liquidity indicators, particularly those based on real time data, can give us timely hints of whether and when to expect a top, in conjunction with the TA. The banking data that I focus on here is released with a 9 day lag, but it can confirm what we’re seeing on the price charts. In addition, it often has enough lead time over the market trend that it can be timely in signaling and not just confirming a turn that’s about to happen. Non-subscribers, click here for access.

The Fed’s weekly H41 balance sheet data is, with the exception of occasional emergency measures, a constant until the Fed changes policy. The Fed’s balance sheet reduction program steadily reduces money in the system by a net of about $70 billion per month. That’s a discussion that we’ve had in other reports. That’s the key negative force that is a background constant which private money creation must overcome to drive stock prices in a persistent uptrend. Non-subscribers, click here for access.

Those forces were in control from May to July, but they’ve lost their grip since then. During the rally, animal spirits raged, and traders of all stripes were happy to take on more leverage to buy stocks. Lately, those animal spirits have flipped, especially over the past few days. Non-subscribers, click here for access.

How easily the market switches from greed to fear is a hallmark of the fact that with the central banks out of the money printing business, money creation is now entirely dependent on the willingness of market participants to borrow to buy. When they borrow and buy, collateral prices rise and money increases. The process is like a dog chasing its tail. When the dog gets tired, it just lays down on the floor. Non-subscribers, click here for access.

Over the past 3 weeks, traders tired of the game. Now they’re sleeping and prices are falling. They’d better watch out, or soon the margin man will come to the door to take the sleeping dogs to a kill shelter. Non-subscribers, click here for access.

We can get a picture of those forces from bank deposit data and bank repo data. Non-subscribers, click here for access.

Other key real time measures that we can watch are Money Market Fund Assets (MMF) and the Fed’s Reverse Repo (RRP) slush fund. During the rally in June and July, both shrank as investors piled into stocks. Institutional investors and hedge funds withdraw the money to buy stocks from their MMF. Banks and dealers also withdraw cash to buy stocks directly from the Fed’s RRP fund. Non-subscribers, click here for access.

Those funds have stabilized, and in the case of Fed RRPs rebounded a little, in August . It means that they’re selling, which we already know from watching the price charts, and depositing the proceeds back in their MMFs and Fed RRPs. Non-subscribers, click here for access.

This report updates the data and tells you exactly what it means along with what to look for and what to do about it. Check it out! Non-subscribers, click here for access.

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! 

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Gold’s Flat Squeeze Tightens

Lee Adler

Flat is as flat does, but a big break is coming.

I have added another pick to the miners’ swing trades.  Non-subscribers click here for access.

Subscribers, click here to download the report.

I have added another buy to the miners’ swing picks, bringing the total to 6 now.  Non-subscribers click here for access.

Subscription Plans

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

The strategy and tactics suggestions in this report are informational and general in nature, and illustrative of one approach. They are not investment advice. No representation is made that it is the best approach, will be profitable, or even suitable for any particular investor.

Nothing in this letter is meant as personalized investment advice and you should not construe it as such. Trading involves risk of loss, and in the case of options, the loss can be 100% of the amount invested. Any trading that you do with reference to strategies and tactics suggested in this report should be done only after consulting with your financial adviser. Trade at your own risk. 

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Screen Picks – An Awful Week, But Hold On a Minute!

Lee Adler

I narrowed the final double check to Friday only this week since Friday’s hard selloff fully negated Thursday’s gains. The buys and sells were small in number and nearly the same on both sides with just 29 on the buy side and 30 on the sell side. Surprising. Had Thursday’s signals been included, the sells would have overwhelmed the buys.

After reviewing all the charts with final signals I added just one pick on the buy side (see table below) and no sells. The one buy was a gold stock, hardly a bullish omen. Non-subscribers click here for access.

Technical Trader subscribers click here to download the complete report.

Not a subscriber? Get price and time targets, and weekly swing trade chart picks, risk free for 90 days! 

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. This is a developmental and experimental exercise, for the purpose of providing experienced chart traders with ideas and concepts to use or not use as they see fit.

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

The public facing report is not the complete report. Only subscribers have access to the full report and regular tracking of the theoretical picks and closeouts made in the reports.

Go to the post

Shape of the 6-month Cycle Bottom

Lee Adler

The cycle picture is surprisingly sanguine in view of Friday’s selloff. It hasn’t done much damage yet. But it will if the decline continues on Monday.

Non subscribers click here to access.

Technical Trader subscribers click here to download the complete report.

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. 

Go to the post