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Chart Picks – Tons of Fake Signals Are Mostly Noise

Lee Adler

Since the last report two weeks ago, before our half-season break, four picks hit their stops. All were longs. Ironically, the only remaining pick is a short, and it has a minimal gain. I tightened the stop on it. For some odd reason, I suspect that it will get taken out. 😉

The current screen from charts as of the close on Friday, July 9, had a whopping 139 buys and 13 sells. Two of the sells were inverse funds, making the final score Bulls 141, Bears 11. But the kicker is that 7 of the sells were bond funds. There were only 4 equity sell signals out of the total 152 signals. That’s mind boggling.

I took a little vacation last week, so no weekly figures to compare. Before the break, they had been lopsided on the buy side. The market has made surprisingly little upside progress, given the surfeit of buy signals. There’s a lot of noise, and not a lot of direction in these signals.

The enormous bullish spread on Friday would normally suggest thrust, and a new upleg, meaning that this rally would be likely to run for weeks. But, once again, I wasn’t impressed after eyeballing all 152 of the charts with signals. Most looked to be of the rangebound whipsaw variety. I didn’t see that many that appeared to be in an early upmove setup. There were only 5 charts I liked enough to add to the list for this week.

Here are the picks I liked from Friday’s raw data. They’re all longs. The stop levels also represent no-go prices if the these long picks open below their stop.

Table in subscriber report.

This table summarizes recent list performance. Current charts of new picks are below.

Get the newest pick and review charts of existing picks in today’s report. Technical Trader subscribers click here to download the complete report. 

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Real Time Tax Data Hot Like the Weather

Lee Adler

I wanted to take a short break from my short vacation to get this post out. I’ll take a few more days hiatus and get back to a regular schedule posting next Monday.

My headline for the revenue update last month was Seven More Weeks of Bond Market Nirvana. Well, that’s four weeks down and three to go. But it could be 3 months. Because tax revenue momentum is still, hot, hot, hot, like the weather where I am in central Europe. They’re calling for a high of 100 on Thursday, here in Bratislava, where I’m currently sweating out a short visit.

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Gold Trader Vacation Week

Lee Adler

I’m taking a short vacation for the short holiday week, as I travel north from Croatia. The gold report will not be published today, but will return early Monday. I will post a short update on real time Federal tax collections and the deficit, in a few hours.

I hope that you enjoyed the holiday weekend, and are perhaps taking an extended few days to vacation, relax, and enjoy life also. We all need that time after what we’ve been through for the past 17 months.

I certainly feel joy at being able to return to exploring the Old World. Upon saying farewell to 1000 year old Zadar, Croatia, where I resided for the past 8 months, I spent a few days in the amazing city of Ljubljana, Slovenia. It’s one of the most fun and beautiful cities I have seen in Europe.

 

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Now, I’m in Bratislava, Slovakia, which I have not had a chance to explore yet, but I hear that it too is beautiful. Crossing the Danube by bus last night, I was confronted with a modern city, dotted with tall skyscrapers and construction cranes. It could have been any mid sized American city. Which was odd. I’m looking forward to exploring the Old Town and other historic sites over the next 3 days.

Unfortunately, strolling around the city may not be too enjoyable, with temperatures rising from 92 today to 99 on Thursday. No problem. The humidity will “only” be 41%.

On Friday, I head to Krakow, Poland, and will also visit Auschwitz. I suspect that I have second or third cousins who perished there, and one who may have survived as an infant. From Krakow, I’ll head to Warsaw for a month, where I’ll be doing some digging into my ancestral history. I’ll visit the towns where my maternal grandmother and grandfather grew up before they left for the US, and try to find any archival links to extended family who remained in Poland.

Al that said, I’m definitely looking forward to resuming our regular publication schedule next week! See you then!

Subscribers, click here to download last week’s report.

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The Debt Ceiling Looms Over the Fed Balance Sheet

Lee Adler

Note: Holiday Publication Schedule- I’ll be taking a brief break from publishing over the holiday week. I expect to resume publishing on July 6. Enjoy your holidays! 

The Fed’s balance sheet continues to grow. But the often repeated figure of $120 billion per month in Fed asset purchases is inaccurate and misleading. The Fed’s balance sheet grew by $198 billion for the 4 weeks ended June 23. The Fed’s total QE purchases for the month of June were $202 billion, including the weekly Treasury purchases, and all the forward MBS purchase contracts that settle in the third week of the month.

I wanted to get this report out before the holiday weekend, and my planned travels over the next two weeks. I’ve been planning the trip and at the same time packing up for my exit from Croatia after residing in this wonderful country for the past 18 months. I apologize for this report being perhaps more disjointed and incoherent than usual. Hopefully, the ideas I want to communicate are clear enough.

The Fed’s balance sheet continues to grow. But the often repeated figure of $120 billion per month in Fed asset purchases is inaccurate and misleading. The Fed’s balance sheet grew by $198 billion for the 4 weeks ended June 23. The Fed’s total QE purchases for the month of June were $202 billion, including the weekly Treasury purchases, and all the forward MBS purchase contracts that settle in the third week of the month.

Other Wall Street observers don’t count everything. They ignore the Fed’s MBS purchases bought to replace those MBS holdings that were prepaid because borrowers paid off their balance either by sale or refinance.

That money comes out sale or refinancing proceeds of individual mortgage borrowers. It has no impact on the financial markets. To replace those prepaid MBS, the Fed buys more MBS from Primary Dealers. The cash the Fed pays to replace those prepaid MBS goes right into the accounts of the dealers. It makes absolutely no difference why the Fed bought the paper. It doesn’t matter if it’s new paper or rollover paper. All $202 billion went into Primary Dealer accounts. Not $120 billion.

Another factor boosting the markets lately is the Treasury’s T-bill paydowns, which I’ve been reporting for you regularly. They totaled $133 billion in June, coming out of the Treasury account on the Fed’s balance, sheet, and mostly going into RRPs. You would think that the markets would have done even better with all this cash flooding in. But most of the paid off T-bills were held by money market funds. They’re not going to put that cash into longer term Treasuries or stocks. They had no place to put the cash, so they sent it off to the Fed for safekeeping, in the Fed’s RRP program, while they wait for T-bill issuance to pick up again.

That will happen, but the question is the timing. The debt ceiling is the wildcard.

This report examines what it means for the stock and bond markets, particularly when we can expect bullish to turn bearish. Click here to download the complete report.

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End Stage Rally

Lee Adler

Last week’s rally still left the appearance that the longer cycles are topping out. There are some warning signs that stick out like sore thumbs. But first, more upside. Here’s how much, and when to look for it to end.

Technical Trader subscribers click here to download the complete report.

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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. 

Note: Next weekend is the Fourth of July, with the holiday celebrated Monday for US business. In honor of that, and the fact that I’ll be doing a little traveling (Slovenia that weekend), and that none of you will be here either 😁, I will also take a few days off. Therefore, this report and the Chart Picks report will not be published next week. They will return as usual, in the early morning hours of Monday, July 12 from Krakow, Poland.

Now that I have my vaccination certificate, I plan to do quite a bit of traveling again. If you’re interested in travel, I post my better photos at Instagram.com/200daysineurope. Join me in my travels around Europe!

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Chart Picks for the Week of June 28, 2021

Lee Adler

Yet again, whenever I pick a few shorts to add to the list, the market smacks me upside the head. Fool me once, shame on you, fool me twice, shame on me. It’s like our permabear friends, whose names I’ll withhold out of respect for the dead, who have been warning for 12 years that the market is about to crash. They will be right one day. Well, every few months I’ll see a few short picks that I like and add them to the list. We’ll probably keep losing money on them, but one day, I’ll be right. You’ll see! 😆

Good grief, though. I’m beginning to wonder if this will ever end.

The list had an average performance of -0.2% on an average holding period of 6 calendar days, including a couple that got stopped out.  I’m adding two longs this week.

The current screen from charts as of the close on Friday, June 25, had 48 buys and 7 sells. Two of the sells were inverse funds, making the final score Bulls 50, Bears 5. I am adding two of the buys to the list for this week. They are highlighted in green in the chart below.

The bulls won every day last week, of course.  For the past 5 trading days, there were 244 buys versus 48 sells, a spread of +206. That’s the biggest bullish tilt since +218 on May 20.

But the character of this is different than the last two times there was a triple digit buy side advantage. Both of those rode the back of one big thrust day. This time it’s just been a steady roll higher. It feels like an end stage move, rather than an initial thrust.

Get the newest pick and review charts of existing picks in today’s report. Technical Trader subscribers click here to download the complete report. 

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Now The Balance Begins To Shift

Lee Adler

The balance between QE and Treasury supply will begin to shift in July. The underlying bid it has provided for stocks and Treasuries will begin to fade.

This report tells why, and what to look for in the data and the markets.

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Flying Blind, But They Warned Us

Lee Adler

Cycles are topping out. That includes the big ones.

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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