Liquidity Trader

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So I’m on the lookout for xxxxx xxxxxx xxxx xxxx after this pullback phase is complete. It might make a new high. xxxxxxxxxx xxxxxxxxxxxxx xxxxxxxxxx prime time for the 6 month cycle high. If it comes before that, so be it, but at the moment there’s no sign yet that this is it. Non subscribers click here to access.

Third Rail Channels – The meltup channel finally broke last week, but there are multiple uptrend lines just below xxxxxx xxxxxxxxx xxxxxx xxx that should be support. The sharpest channel line starts the week at xxxx and rises to xxxx on Friday. They need to break to get anything significant going on the downside. I’d look for at least a bounce from one of those trendlines, and either a double top or lower high before a downtrend starts in earnest. If xxxx breaks, the next target for a pivot low would be xxxx. Non subscribers click here to access.

That resistance cluster xxxx-xxxx is still there. Obviously, they would need to clear that to extend the rally. If they do, the next target would be xxxx. Non subscribers click here to access.

Long Term Weekly Chart – The market pulled back after breaching previously noted key trend resistance at xxxx to end the week well below that level. As a result longer term xxx signals xxxx xxxx xxxxx . There’s a chance that this is the beginning of a xxxx xxxxxxx xxxxxx, but there’s more xxxxx xxxxxxxxx xxxxx xxxxx xxxxxx. Non subscribers click here to access.

Monthly Chart – If the market stalls and rolls over here to end August below xxxx it would set up a xxxxx xxxxxx for September onward. Failing to clear xxxx at the end of August would allow for a drop to trend support around xxxx. Non subscribers click here to access.

Cycle Screening Measures – Friday’s pullback represents only the potential for a turn. None of the xxxxxx xxxxxx have xxxxxxxxx yet. A down day Monday would xxxxx the process, however. Barring that, the patterns would remain very similar to March – April 2020. 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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Still Waiting for Gold Dough

Lee Adler 3 - Gold Trader August 19, 2022

Still waiting for confirmation of an upturn in the 9-12 month cycle. Until that happens, there’s still downside risk, with limited upside. Here’ are the parameters to watch.

Mining Picks- As a result of the pullback, and my placement of tight trailing stops, all open picks hit their stops and were closed off the tracking list. The result was an average gain of 12.9% on an average holding period of 3½ weeks. Non-subscribers, click here for access.

I had a bias of expecting to see a few short term buys on visual review of the screens. But when I ran the screens, there were just 2 charts with repeat buy signals and 9 with repeat sell signals. This is better than last week when there were 3 buys and 21 sells, but it’s still not fertile picking grounds for buy side trades. Non-subscribers, click here for access.

These two negative weeks followed a preponderance of buy signals for the prior 4 weeks. Therefore, for now, I consider this a normal corrective phase. However, Thursday alone had 2 buys and 3 sells, not a ringing endorsement of a short term bullish outlook. Non-subscribers, click here for access.

Upon visual review, the two buys did not look at all bullish, so we’ll be sitting out this week with no picks. We wait. Non-subscribers, click here for access.

Averages assume 100% cash, no margin, no options. The use of margin or options will magnify both gains and losses. See disclaimer. Non-subscribers, click here for access.

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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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Has Rule Number One Been Repealed?

Lee Adler 1 - Liquidity Trader- Money Trends August 18, 2022

Rule Number One is “Don’t Fight the Fed.” But Wall Street and its willing herd have done just that for the past month. Stocks have continued to rally, and bonds have held their own, both in the face of increasingly tighter macro liquidity as the Fed whispers easy while tightening the noose.

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A big reason for the rally is that the stock market became so oversold relative to the liquidity trend in May and June. That condition warned us of the potential for a sharp rally. The market had become too stretched on the downside. It was enough to drive persistent short covering, and ultimately margin buying, as Wall Street searched frantically for excuses to buy stocks. Non-subscribers, click here for access.

Sure, the rally feels surprising and frustrating, but the warnings were there, and I posted them in the last two CLI updates in May and June. Non-subscribers, click here for access.

May 23-

June 28-

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Meanwhile, the Street and its media handmaidens grasped for straws, and they found them. They found them in the “moderating” CPI report, and in the Fed meeting minutes. From these reports, they inferred that the Fed would err on the side of ease instead of constant tightening. Naturally, they misread the data and the fact that the Fed minutes are propaganda. Non-subscribers, click here for access.

So much for the narratives. The fact is that the market can only run counter to the macro liquidity trend for so long before the short covering and animal spirits that drive margin buying are exhausted. And if Wall Street is engaging in fantasy, as I think it is, then at some point, probably soon, a moment of recognition will set in. The selling will start, and the rally will reverse. Non-subscribers, click here for access.

How do we know when? That’s a matter for the technical analysis. Non-subscribers, click here for access.

The TA that I cover in the weekly Technical Trader reports has been remarkably accurate on the broad market, but less so on the individual swing trade picks, where it’s been more miss than hit in the last month. This dichotomy between the micro and macro TA is an indication of a fractured market that is not as strong the gain in the major averages suggests. There’s a lot of scurrying around as traders look for the next hot stock or the next short squeeze. A few are hitting big, while others pull back or churn in a range. That’s enough to power the broad averages higher. Non-subscribers, click here for access.

The technical projections for the market averages have pointed to xxxxxxxxxx xxxxxxxxxx xxxxxxxxx range for several weeks. They’re xxxxxxx xxxxxx xxxxxx. Non-subscribers, click here for access.

Longer intermediate swing projections point xxxxxx, but I’m skeptical. The liquidity situation is turning more bearish as the Treasury pounds the market with new supply and the Fed holds firm on QT. The Fed is set to tighten the screws even more in a couple of weeks. It announced that they will double QT to $95 billion per month in September. Non-subscribers, click here for access.

Regardless of Wall Street’s fantasies, neither the markets nor the inflation data, nor the economic data, will keep the Fed from its appointed rounds. The strength in all three will keep the Fed on track. It is likely to stay on that track until something breaks. The Fed is never proactive. It is always reactive. It drives in the rear view mirror. The Fed will only loosen after the crisis, not pre-emptively. Non-subscribers, click here for access.

On top of the Fed tightening, the US Treasury will be in the market with even more borrowing to fund the new spending program just signed into law. That borrowing will suck cash out of the financial markets and pump it into the economic stream. It sets up conditions where stronger than expected economic data could continue to surprise the economists, the Street, and the Fed. So what would be the Fed’s excuse to stop tightening? Non-subscribers, click here for access.

Furthermore, despite all the speculation that the Fed will take its foot off the brake, sticky CPI at 8.5% will hardly allow that. The idea that the end of tightening is near is wishful thinking. Especially with another surge of government spending on the way. So keep in mind that the Fed drives in the rear view mirror. The Fed will continue to remove money from the system. And the currently strong financial markets will only encourage that. Eventually that will result in a crunch, and the market will fold. Non-subscribers, click here for access.

The time to reverse course and get short for trades is coming xxxx to a trading screen near you. The TA will tell us when. In the meantime, riding the current wave xxxxxxx xxxxxxx xxxxxx. Non-subscribers, click here for access.

That’s especially true for the bond market where yields are on the razor’s edge. Wall Street has been spreading a lot of fertilizer about the 10 year yield going to 2%. But another couple of upticks in that yield now around 2.80-2.85 will xxxxx xxxxxx xx xxxxxxxx xxxxxx, and probably a xxxxxxxxxx xxxxxxxx xxxxxxxxx xxxxxxxxx xxxxxxxx. Non-subscribers, click here for access.

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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Swing Trade Screens – Buys Overwhelm Sells, It’s Late But One Sector Looks Ready to Roll

Lee Adler 2 - Technical Trader August 15, 2022

The final list of double screened output for last week had 89 charts with second or third buy signals on Thursday and Friday. There were 24 charts with a second or third sell signals to end the week. Friday on a standalone basis had 67 buy signals and just 8 sell signals.

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It was an overwhelming show of force after 2 weeks when sell signals held the edge. The rally broadened last week. Given the duration of the rally already, I expected to see mostly second wind buy signals, which can be very profitable, but carry higher risk. Non-subscribers click here for access.

I undertook the usual visual review of the charts that met the multiple signal criteria. I didn’t see any short side setups to get excited about. The charts with sell signals did not have good bear trend structures, so I demurred on the shorts. Non-subscribers click here for access.

Most of the buys were extended, or approaching or at resistance – not good buy points. But I did find a few that appeared to have running room or breakout potential. I added 5 of them to the list below. 4 were oil and gas or related. Non-subscribers click here for access.

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. I start the weekly process by screening for daily buys and sells from the previous Friday through Thursday. I then rescreen that output, for additional signals in the progression on Thursday and Friday. Non-subscribers click here for access.

The percentage gain is based on 100% cash positions, with no margin and no use of leverage or options. Non-subscribers click here for access.

7/4/22 Picks closed out in June averaged a gain of 10.1% on an average holding period of 17 calendar days. That works out to an average of 4.1% per week. There were 12 closed picks. The win rate was 75%. I would hope to continue that, but it is by no means a given. Non-subscribers click here for access.

June’s performance is not something we should expect to duplicate too often, if at all. The average weekly gain since I tweaked the methodology in mid January is just 1.29%, while trending upward lately. Non-subscribers click here for access.

6/6/22 Picks closed out in May averaged a gain of 3% on an average holding period of 2 weeks. That worked out to an average of 1.5% per week. There were 28 closed picks. 25 were shorts. Non-subscribers click here for access.

5/9/22 April was a challenging month. The final tally of closed picks in April had an average loss of 0.4% with an average holding period of 11 calendar days. My system does not do well when the average low to low cycle duration drops below 4 weeks. Non-subscribers click here for access.

March was better. Picks closed in March had an average gain of 4% with an average holding period of 23 calendar days. Non-subscribers click here for access.

8/1/22 July had been a narrowly rangebound meatgrinder market until last week. Only two picks were closed out during the month for an average loss of 2.6%. But the 7 picks that were still open at the end of the month had an average gain of 3.7% on an average holding period of 11 calendar days. The month should have been better, but I had those shorts last week, and they hurt us. Non-subscribers click here for access.

Last week I had decided to close out 3 shorts at Monday’s opening print. Those are shown on the table below. Another short hit its stop and it too is gone. The 5 picks closed out so far in August have only averaged a hair above breakeven on an average 2 week holding period. This is a poor performance, given the strength of the rally. I kept leaning to the short side, which exacted a cost. Non-subscribers click here for access.

I unfortunately added another short to the list and no longs last week. The result on all open and closed picks to start this week is an average gain of only 6.2% on an average holding period of 12 calendar days. Non-subscribers click here for access.

I have added and adjusted stops on the remaining picks. These are shown on the tracking table in the report, along with the charts of open and new picks. Non-subscribers click here for access.

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. 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 letter is meant as individual investment advice and you should not construe it as such. These picks are illustrative and theoretical. The method behind these picks is experimental, and may change over time. I may trade my own account, and may buy, sell, sell short or cover short, or have positions in any of the stocks on the list at any time, based on a particular trading style that is unique to me. My entry and close out levels are likely to differ from those published due to the exigencies of my trading style and time constraints. I post these items in good faith for informational and educational purposes, and do not take positions in opposition to those which are published. All chart picks are actively traded stocks, and I assume that no subscriber to these reports, nor the total of all subscribers taking positions, would do so in a size that would influence the market price.

Performance tracking assumes 100% cash basis, no margin, no options. You should not assume that recent performance as reported can or will be repeated in the future. Trading involves risk of loss. In the case of options, the loss can be 100% of the amount invested. When leverage is used the loss can exceed the account equity under certain conditions.

The opinions expressed here assume that readers are experienced investors or are working with an investment advisor.

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Yikes!

Lee Adler 2 - Technical Trader August 15, 2022

Last week I described how unbelievably bullish it all looked. That turned out to be correct, and could get worse from here (for bears).

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Cycles- Cycle projections have risen. Both the 6 month and 10-12 month cycle up phases now project to xxxx. The high on the 6 month cycle is due xxxxxxxx xx to xxxxxxx xx. The 10-12 month cycle high is due in xxxxxxxxxx xxxxx xxxxxxx, suggesting a double top. Non subscribers click here to access.

The 13 week cycle projects to only xxxx. Shorter cycle projections suggest an interim high between here and xxxx. Non subscribers click here to access.

Third Rail Channels – The measured move target of xxxx is now in play. The current meltup channel centerline will go from xxxx to xxxx this week. That needs to be broken to end this phase of the rally. Non subscribers click here to access.

There’s a cluster of longer term resistance lines from xxxx to xxxx. If they don’t stop this thing the next target would be the March high of xxxx. Yikes! Non subscribers click here to access.

Long Term Weekly Chart – The market faces major trend resistance xxxx xxxx at xxxx. If it clears that, it would have clearance to xxxx. An extension of the rally from here would start triggering longer term xxxx xxxxxxx. A rollover now from here would xxxx xxxx xxxx xxxx. Non subscribers click here to access.

Monthly Chart – Clearing xxxx would make room for a move to xx-xxxx. Failing to clear xxxx would allow for a drop to trend support around xxxx. Non subscribers click here to access.

Cycle Screening Measures – The patterns are very similar to March – April 2020, as you can see on the second chart.

If the market drops on Monday, it would set up a 3 step negative divergence that would normally signal that a short term market peak is at hand. But if it keeps going, it would show that cyclical breadth momentum is strengthening, which would suggest significantly more upside.

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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Mildly Bullish Outlook for Gold Holds

Lee Adler 3 - Gold Trader August 13, 2022

Still not enough evidence to overturn my bottom call from two weeks ago. Holding 4 miner longs as swing trades.

Over the past week the sector generated 3 charts with repeat buy signals and 21 with repeat sell signals. Not a good sign, but these are short term signals. This follows a preponderance of buy signals for the past 4 weeks. Therefore, for now, I consider it a normal corrective phase. And Friday alone had a much better look with 12 buys and only 2 sells. Non-subscribers, click here for access.

Upon visual review, I did not like any of the 3 stocks that were buys, so I stood pat on the 4 picks already on the list. All held gains, with an average gain of 14.9% on an average holding period of 3 weeks. I adjusted the stops to trailing stops. Non-subscribers, click here for access.

Averages assume 100% cash, no margin, no options. The use of margin or options will magnify both gains and losses. See disclaimer below the charts. Non-subscribers, click here for access.

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Swing Trade Screens – One Bad Trade Hurt But the Rest Bailed Us Out for a Win

Lee Adler 2 - Technical Trader August 8, 2022

Looking at the final list of double screened output for last week there were 26 charts with multiple buy signals versus 31 the week before. Four of the buys were inverse ETFs including one bond fund, so the edge to the bear side was even bigger.

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Surprisingly there were 59 charts with a second or third sell signal on the week, versus 29 the week before. This is the second straight week with an edge to the sell side. And the edge was much bigger in the more recent week. It may be a tell, but it doesn’t guarantee a reversal. Broad market indicators aren’t signaling a top yet. So we’ll see. Non-subscribers click here for access.

For the purpose of this report, the focus is on individual stock swing trade picks anyway.
Looking at Friday on a standalone basis there were 16 buy signals and 51 sell signals.
I undertook the usual visual review of the charts that met the multiple signal criteria. Obviously, I expected to find more sells than buys, like last week. Just one problem. Of the shorts that I chose last week, one was a profit killer. Fortunately, there were enough winners to overcome my one really lousy pick. Non-subscribers click here for access.

7/4/22 Picks closed out in June averaged a gain of 10.1% on an average holding period of 17 calendar days. That works out to an average of 4.1% per week. There were 12 closed picks. The win rate was 75%. I would hope to continue that, but it is by no means a given. Non-subscribers click here for access.

June’s performance is not something we should expect to duplicate too often, if at all. The average weekly gain since I tweaked the methodology in mid January is just 1.29%, while trending upward lately. Non-subscribers click here for access.

6/6/22 Picks closed out in May averaged a gain of 3% on an average holding period of 2 weeks. That worked out to an average of 1.5% per week. There were 28 closed picks. 25 were shorts. Non-subscribers click here for access.

5/9/22 April was a challenging month. The final tally of closed picks in April had an average loss of 0.4% with an average holding period of 11 calendar days. My system does not do well when the average low to low cycle duration drops below 4 weeks. Non-subscribers click here for access.

March was better. Picks closed in March had an average gain of 4% with an average holding period of 23 calendar days. Non-subscribers click here for access.

8/1/22 July had been a narrowly rangebound meatgrinder market until last week. Only two picks were closed out during the month for an average loss of 2.6%. But the 7 picks that were still open at the end of the month had an average gain of 3.7% on an average holding period of 11 calendar days. The month should have been better, but I had those shorts last week, and they hurt us. Non-subscribers click here for access.

Last week 4 picks hit their stops and I will close 3 more as of this morning’s opening print. The result on all open and closed picks to start this week is an average gain of 2.3% on an average holding period of 12 calendar days. I have added and adjusted stops on the remaining picks. Non-subscribers click here for access.

After reviewing the charts, I didn’t see anything I liked on the buy side. Most of the sells looked too early. And many were bond funds. They looked good, but don’t move enough for our purposes. I only liked one chart on the sell side as a short, XXX. Non-subscribers click here for access.

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. 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 letter is meant as individual investment advice and you should not construe it as such. These picks are illustrative and theoretical. The method behind these picks is experimental, and may change over time. I may trade my own account, and may buy, sell, sell short or cover short, or have positions in any of the stocks on the list at any time, based on a particular trading style that is unique to me. My entry and close out levels are likely to differ from those published due to the exigencies of my trading style and time constraints. I post these items in good faith for informational and educational purposes, and do not take positions in opposition to those which are published. All chart picks are actively traded stocks, and I assume that no subscriber to these reports, nor the total of all subscribers taking positions, would do so in a size that would influence the market price.

Performance tracking assumes 100% cash basis, no margin, no options. You should not assume that recent performance as reported can or will be repeated in the future. Trading involves risk of loss. In the case of options, the loss can be 100% of the amount invested. When leverage is used the loss can exceed the account equity under certain conditions.

The opinions expressed here assume that readers are experienced investors or are working with an investment advisor.

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Fasten Your Seatbelts – Updated Cycle Projections Are Shocking

Lee Adler 2 - Technical Trader August 8, 2022

I try not to argue with the market. Contrary to the belief of some Wall Street seers, the market is never wrong. It’s always right about the only thing that matters. The price. The price is the price. Nothing that you or I, or anyone else thinks about it will change that. It is what it is. There’s a reason for Rule Number Two: The trend is your friend. It’s because in terms of trading, it’s all that matters.

Technical Trader subscribers click here to download the complete report.

Technical Trader subscribers click here to download the complete report.

Last week I talked about the need to suspend disbelief because Wall Street is theater. We need to believe But I’m having trouble believing these updated projections, just as I’m having trouble believing the Phillies winning every day lately. But I won’t argue with them. I’ll just shake my head and say “Hard to believe, Harry,” hearing Rich Ashburn’s deadpan drawl in my brain. So until the market decisively tells us otherwise, you gotta believe this. Non subscribers click here to access.

Cycles We are looking at a projection of xxxx on the 6 month cycle, with a high due xxxxxxxx xx- xxxxxxxx xx. The 13 week cycle high is now overdue and the projection for that cycle now matches the 6 month cycle projection. The 6-7 week cycle now points to a projected high of xxxx with the high overdue. Only 4 week cycle indicators are currently suggesting a down phase. Non subscribers click here to access.

Third Rail Channels – Uptrend channels haven’t been violated yet. A meltup channel starts the week at xxxx and has an upslope of 24 points per day to end the week at xxxx, That should be broken easily. A daily close below xxxx would be required to trigger a bigger short term trend reversal. Non subscribers click here to access.

Long Term Weekly Chart – The 10-12 month cycle bottom looks xxxx. The market is now entering an area of what should be massive resistance from xxxx to xxxx. 3-4 year and long term cycle indicators have not yet turned xxxxxxx. Non subscribers click here to access.

Monthly Chart – Clearing xxxx would make room for a move to xx-xxxx. Failing to clear xxxx would allow for a drop to trend support around xxxx. Non subscribers click here to access.

Cycle Screening Measures – The cycle screening aggregate stayed strong all week for the second straight week. It has formed a negative divergence with the market averages indicating fewer stocks participating, but so far, there’s xxxx xxxx that xxxx xxxx xxxxx xxxx. We need a xxxx xxxx xxxx for a sell signal. Non subscribers click here to access.

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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“As Good as It Gets” Was Good While It Lasted

Lee Adler 1 - Liquidity Trader- Money Trends August 6, 2022

The headline for the July 18 update on this subject was “As Good as It Gets.”

Well, guess what. Time’s up. Party over. The Treasury has revised its issuance forecast, as we knew it would. It will now be slamming the market with both coupon supply (notes and bonds) and T-bills.

Subscribers, click here to download the complete report.

Subscribers, click here to download the complete report.

The T-bills are the biggest difference. The Treasury had been paying down massive amounts of T-bills for months, stuffing cash back into the accounts of money market funds, dealers, banks, and investors. That game is now running in reverse. The Treasury is now sucking money out of the system from those same players. And the Fed isn’t replacing it. The cash that the Treasury uses to repay the Fed disappears from the firmament. Non-subscribers, click here for access.

At least until the Fed restarts QE. Non-subscribers, click here for access.

That’s nowhere on the horizon. Therefore the message remains, xxxx xxxxxxxx xxxxxxx xxxxxxin stocks and bonds. We rely on the technical analysis in the Technical Trader updates for the timing of stock sales and shorting. Non-subscribers, click here for access.