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Upon Further Review Gold Bottom Call Stands

Lee Adler

There’s not enough evidence for the umpires to overturn last week’s call on the field, but neither was there enough to confirm. Therefore the call stands.

Until it doesn’t. Meanwhile, gold is making progress toward completing a 9-12 month cycle low. There’s still risk of a pullback toward a test of the lows over the next xxxx xxxxx  xxxxx or so. On the other hand clearing xxxx should get things rolling toward xxxx.

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Over the past week the mining stock sector generated 23 charts with repeat buy signals and still 18 with repeat sell signals. The mining stocks lagged the sharp turn in the metal. But there has been a preponderance of buy signals for the past 3 weeks, so some reduction in buy signals and increase in sell signals is to be expected. The fact that there’s still a preponderance of buy signals is a positive sign. Non-subscribers, click here for access.

Upon visual review, I selected just one chart to add to the list. xxx. I’m not enamored with the idea of buying stocks that are still in downtrends, even if there are hints of reversal. For now, I’m only comfortable with the level of exposure we already have on this list. Non-subscribers, click here for access.

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Treasury Confirms Supply Tsunami We Expected – Will Obliterate Everything

Lee Adler

We’ve had a helluva rally in stocks and bonds. The conditions were right for this rally, and we expected it. However, it was a bit bigger than I thought it would be. There was more liquidity around then even I expected. And the Street did its job of squeezing the shorts and creating a false narrative about pending recession and the end of Fed tightening to drive the rally. It was all BS, but it worked.

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It will no longer work. Liquidity will dry up like a California forest in July. The fires will start, and without liquidity to douse them, they will burn like the fires of Dante’s hell. Non-subscribers, click here for access.

The US Treasury confirmed yesterday that there will be an enormous increase in supply in August, just as I was able to previously project based on the facts and trend data we already had. Non-subscribers, click here for access.

The stock and bond rallies are not long for this earth. It’s time to watch for, and heed, the technical sell signals. Non-subscribers, click here for access.

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Withholding Tax Collections Solid in July, But Here’s Why the Party is Over

Lee Adler

Federal tax collections were solid in July. The recession that mainstream economists have been predicting, may be coming. xxxxx xxxxxxxx xxxxxxxxx. But it’s xxxxxxxx xxxxxxx xxxxxxxx . Withholding tax collections are still going xxxxxxx xxxxxx despite xxx xxxxxx xxxx.

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That slowing isn’t out of the ordinary. Collections fluctuate month to month. They’re still solidly positive on balance. Non-subscribers, click here for access.

Government finances also benefitted from a sharp drop in spending. The usual July deficit became a surplus. Non-subscribers, click here for access.

Treasury supply was therefore light. In fact, nonexistent for the first 3 weeks of the month. There were $12 billion in net paydowns from July 1 to July 21. The markets were flooded with cash. Non-subscribers, click here for access.

The bond market had a stupendous rally. I had expected bonds to rally based on the light supply, but this was ridiculous. As usual, Wall Street overdid it. Now the xx xx xxx x x. Non-subscribers, click here for access.

While revenue growth shows no sign of going negative, Congress just passed a spending package that will increase spending. The deficit will begin to grow again. That xxxxx xxxxx to xxxxxxxxxx xxxxxxx supply. At the same time, investors and dealers will have less cash xxxxxxx xxxxx xxxxxxx. That will translate to lower prices and higher yields. Non-subscribers, click here for access.

We already saw the effects of the Treasury running out of excess cash in the last couple of weeks. T-bill paydowns ended as I had projected they would in July. New T-bill issuance is suddenly mushrooming. This will pull cash out of dealer and investor accounts and into the US Treasury, which will instantly spend it to pay its bills and obligations. Non-subscribers, click here for access.

That spending increase might even keep the US economy perking along at xxxxxxxx xxxxxxxxxxxx xxxxxxxx rate, surprising Street economists and portfolio managers. But the cash to support that growth will come from investor accounts and dealer accounts. More money for economic spending, less money for stock and bond purchases. Non-subscribers, click here for access.

The bond rally should xxxxxxxx, xxxxxxxxx xxxxxxxx. The stock rally should xxxxxxx xxxxxxxx xxxxxxxx. If there’s something that would sustain these rallies, xxxxxxxxx xxxxxxxxx xxxxxxxxx. Non-subscribers, click here for access.

Tomorrow I’ll issue a report on Fed QT vs. Treasury supply that examines the recent rally, and a more in depth look at why and where it’s likely to reverse. Non-subscribers, click here for access.

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Swing Trade Screens – We Had Longs, Yay! But…

Lee Adler

We had them, but unfortunately, also had a few shorts that ate up much of what would have been phenomenal profits last week.

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Looking at the final list of double screened output for last week there were 31 charts with multiple buy signals versus 54 the week before. 3 of those were inverse funds, which means that there were only 28 bullish signals. Non-subscribers click here for access.

There were 29 charts with a second or third sell signal on the week, versus 14 the week before. Adding the 3 buy signals on the bearish ETFs makes 32 bearish signals. The fact that there were more bearish than bullish short term signals is surprising, if not shocking. Non-subscribers click here for access.

These numbers remain quite small relative to the universe of more than 10,000 screened stocks. The rally did not have a broad based thrust. Non-subscribers click here for access.

Looking at Friday on a standalone basis there were 33 buy signals and 52 sell signals. Obviously, a bearish tilt. How is that possible with such a big move in the averages? Monday will be interesting. Non-subscribers click here for access.

I undertook the usual visual review of the charts that met the multiple signal criteria. I did not expect to find many buys because the market has already moved for two weeks. I did find one that looked interesting, XXX. To buy XXX or not to buy XXX. That is the question. Non-subscribers click here for access.

I wasn’t finding much that I liked on the short side until I got toward the end of the alphabet. I had just seen a headline in the Wall Street Journal about how great luxury brands were doing, so when XXX showed up in the sell side selections, I gladly added it to the list. I also added XXX, and XXX. 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.

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.

We had no stop-outs last week. This week we start with those 7 open picks, of which 4 are buys and 3 are shorts. I have added or adjusted stops on all existing picks. Non-subscribers click here for access.

I will add 1 buy and 3 shorts to the list.  The picks are shown on the table below (See report). Charts are below that. Non-subscribers click here for access.

Subscription Plans

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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To Blow Off, or Not to Blow Off – That Is the Question

Lee Adler

Wall Street is largely theater, so we need to be able to suspend disbelief if we want to invest and trade successfully.

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Cycles- All cycles remain in gear to the upside, but cycle highs are due xxxxxxx xxxxxxx in all cycles up to 13 weeks duration. Cycle projections of xxxx-xx on the 13 week and 6 month cycles, and xxxx on the 4 week cycles have yet to be hit, so an xxxxxxxxx xxxxxxxxx xxxx is still possible. But it should be the xxxx xxxxxx for xxxxx xxxxxx. Non subscribers click here to access.

The 10-12 month cycle high isn’t due until xxxx xxxxxxx xxxxxxxxx. So we could be in for a lot of xxxxxxxx xxx and xxxx for the next xx xxx months. Unless the market xx xx xxx this week, from a technical perspective the bias should be to the xxxxx for xxxxx months. That’s xxxxxxx xxx the liquidity backdrop. Non subscribers click here to access.

What to do! Non subscribers click here to access.

Hold on to your hats and be nimble.  Non subscribers click here to access.

Third Rail Channels –  The market now faces trend resistance at xxxx. If they clear that, the next trend resistance channel line is indicated around xxxx early in the week, headed for xxxx later in the week. Non subscribers click here to access.

Closing above xxxx would result in a conventional measured move target of xxxx. A daily close below xxxx would be needed to suggest even the possibility of a short term downside 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 xxxx xxxx xxxx. Non subscribers click here to access.

Monthly Chart –  Clearing xxxx would make room for a move to xxxx-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 aggregate indicator has formed a negative divergence xxx the strength of the numbers is very xxxx. The last time the indicator made a pattern like this was from xxxxx xxxx- xxxx xxxx. I need not remind you what happened during that period. 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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Gold Has Made a Bottom

Lee Adler

The price has broken out of a tight 3 week reverse head and shoulders. The implied measured move target is only xxxx. Cyclicality would be favorable for an additional advance from there, after consolidation. This outlook is not carved in stone. There’s still a risk of a lower low on the 9-12 month cycle. To confirm the bullish view, the price needs to be above xxxx by the second half of August.

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Over the past week the mining stock sector generated 14 charts with repeat buy signals and just 3 with repeat sell signals. That’s a good performance, especially after the previous week when there was also a preponderance of buy signals. It’s not an across the board thrust, but we’ll take what we can get. This is the first sign of a bottom, so signs of tentativeness are to be expected.

Upon visual review, I selected two charts to add to the list this week, XXX and XXX.

The two picks added last week are up an average of 3%.

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The Bond Rally That Fooled The Majority And Didn’t Help Dealers

Lee Adler

As you may know, I recently moved to Nice, France, purchased an apartment, and began renovations. I’m living and working in a construction site, and personally managing the renovation. I’m having a blast, but it’s not without its challenges, particularly on leaving enough time to fulfill my obligation to you to get these reports out to you on a timely basis. I’m a little late this week, and I ask your forbearance in this process.

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This undertaking being in France means that those doing the work here will disappear for the month of August. I’ll “relax” by getting these reports out to you on a more regular schedule, at least until the second phase of my reno gets going in September. Everything should be done by the end of September. Then I won’t have any more excuses for late postings. I can’t use strolling the Promenade des Anglais, or Nice’s Old Town just two blocks from here, as an excuse (Non subscribers, click here to read this report).

If you have never been to the South of France, or even if you have, I encourage you to visit. It’s an amazing part of the world. The options for things to do around here are endless, whether it’s beaches, outdoor activities, sightseeing, or culture and food. The last two in particular. It’s France, after all (Non subscribers, click here to read this report).

Fall is gorgeous here, with daytime highs in the low to mid seventies through October, and the mid to high sixties in November. And it is sunny almost every day. If you would like to come, and have questions, drop me a note. Of course, we’ll meet for a cup of coffee, or a drink, or a meal on one of the hundreds of terrace restaurants all over this city. There are thousands of outdoor cafes and restaurants for you to enjoy all around the region, with the some of the world’s best sightseeing (Non subscribers, click here to read this report).

Now on with the show. This is the Primary Dealer update, which I last did in mid June. First, I’ll replay the summary from the last report, then update you on the details through this week. Non subscribers, click here to read this report.

The bottom line is this. Don’t be fooled by what the media is touting as a massive rally in bonds. Yes, it looks big, and it probably has a little further to go over the next couple of weeks. But in the big picture, it’s nothing. It’s likely to xxxx xxx xxxx xxxx (Non subscribers, click here to read this report).

Meanwhile, the dealers have mitigated some of their risk, but they and their big bank parents remain at great risk if bond prices start declining again. That should happen as liquidity begins to tighten again in xxxxxx xxx xxxxxx xxxxx. (Non subscribers, click here to read this report).

The bond rally should have a bit further to go, but I’d be a seller on the first technical signs that the trend is turning. And when bond yields start to rise again, and bond prices start falling again, I’d expect stocks to suffer from the same adverse liquidity factors that would be pulling the bond market down.

LATE BULLETIN! HOLY COW, as I was proofreading this report, I just checked the Treasury issuance schedule for this week, and the Treasury will issue $40 billion in new T-bills on  Monday. That will upset the apple cart. Let’s just accelerate the time frame for when I expect the market to begin experiencing tighter liquidity from xxxxxxx xxxxxxxxx, to the xxxxxxxxx x xxx xxxxxx. We need to be on the lookout for signs of reversal in the bond rally xxxxxx xxxxxxx  I originally thought (Non subscribers, click here to read this report).

But at least this news confirms my earlier forecast that the T-bill paydowns would end in July, making for tighter liquidity in conjunction with the Fed’s QT program. And lest we forget, they plan to double the amount of system withdrawals in that program beginning in September (Non subscribers, click here to read this report).

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Swing Trade Screens – Surprise, Surprise – A Few Shorts

Lee Adler

The final list of double screened output for last week resulted in 54 charts with multiple buy signals, and 14 with more than one sell signal. That’s bullish, but doesn’t suggest major thrust. These numbers remain very small relative to the universe of more than 10,000 screened stocks. Furthermore, a preponderance of these signals were in fixed income funds and high yield stocks.

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The low output continues to reflect a rangebound market with no motive thrust either way. It’s still a meatgrinder market. Non-subscribers click here for access.

Looking at Friday on a standalone basis there were 35 buy signals and 19 sell signals. These are low to middling numbers. While bullish, they do not suggest a broad, powerful rally. Non-subscribers click here for access.

I undertook the usual visual review of the charts that met the multiple signal criteria expecting to find a few buys. I did. Two to be exact. But I found 3 that had nice setups on the short side. Go figure. All 5 picks are shown in the charts and table below. 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.

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.

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.

March was better. Picks closed in March had an average gain of 4% with an average holding period of 23 calendar days.

July has been a narrowly rangebound meatgrinder market. We managed not to get chewed up by mostly staying away. So far this month only two picks have been closed out for an average loss of 2.6%. The two remaining open picks have an average gain of 3.7%. That compares with 12 closed picks in June for an average gain of 10.1%.

This week we start with 2 open picks, both buys and will add 2 buys and 3 shorts. We had no stop-outs last week.

The picks are shown on the table below. Charts are below that. Because of my late posting today, I will track the new picks with an opening price of their 12 noon New York price.

Technical Trader subscribers click here to download the complete report.

Non-subscribers click here for access.

Subscription Plans

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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Gonna Take You Higher, But Not Too Much

Lee Adler

Cycles- The bottoming process in the longer intermediate cycles xxxx xxxxxxx xxxxxxx  as short term cycles got in gear to the upside last week. This doesn’t mean that we’re in for a long and winding xxxx xxxxxxxx phase.

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A 4 week cycle high is due xxxx xx to xxxxxx xx, with the projection xxxxxxxxx xxx. However, the 6-8 week and 13 week cycles point to a range of 4xxx-xxxx, with a high due as late as xxxxxx xx. So the market still has a bit xxxxxxxx xxx xxxxxx xxxxx over the next week. .Non subscribers click here to access.

Beyond that, the 6 month and 10-12 month cycles have xxxxxxxxxxxx xxxxxxxxxx xxxx. A 6 month cycle high is due xxxxxxxxxx xxxxxxxxxx xxx xxxxxxxxx, with an initial projection of xxxx. That’s probably not the last word on that. .Non subscribers click here to access.

Third Rail Channels – If they clear xxxx, the initial targets would be xxxx, and then xxxx. Only if they break those would xxxx be likely as the next target. If they pull back, support is at xxxxx and xxxx. .Non subscribers click here to access.

Long Term Weekly Chart – This chart now suggests but doesn’t confirm a 10-12 month cycle xxxxxxx. Longer term cycle indicators remain bearish. Resistance is suggested around xxxx, and if cleared, xxxx. .Non subscribers click here to access.

Monthly Chart – If they stay above xxxx, there’s room to run to around xxxx in July. .Non subscribers click here to access.

Long term momentum remains on a sell signal but is still above the bottom of a 3 year uptrend channel. Closing any month below that line would be another long term bearish signal.

Cycle Screening Measures – The numbers were strongly positive all week, even Friday, after the pullback. Last week I said that the intermediate pattern has bipolar disorder. With persistently positive numbers for a month now, I’d call it manic. But until the numbers go negative for more than a few days, then the mania will remain in force. .Non subscribers click here to access.

Technical Trader subscribers click here to download the complete report.

.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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Catch a Falling Knife

Lee Adler

Gold’s short term cycles have entered up phases but they haven’t shown anything so far and aren’t likely to. The longer swing cycles have yet to indicate that they’ve bottomed, and they still have lower projections. There’s still risk that they’ll be reached over the next month or two.

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Over the past week the mining sector generated 19 charts with a second or third buy signal on Monday, and no multiple sell signals. Sounds good, right? Non-subscribers, click here for access.

Uhh…. Non-subscribers, click here for access.

This market reminds me of the old Perry Como song. “Catch a falling knife and put it in your pocket. Never let it stab your leg.” Bottom picking for counter trend rallies in bear markets is not my favorite pastime. But given that any bottom could lead to a big rally, I will put one big toe in the water, and steel myself for its amputation. So, from my bottom picking perspective, I’ll go with XXX, tracking it as of the opening price on Tuesday. And, what the hell, XXX has room to pop, with nice positive divergences in the indicators, so I’ll add that as well. Non-subscribers, click here for access.

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