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Primary Dealers Go Full Reverse Thrusters

Lee Adler

We have finally seen the effects of the bond market crisis in dealer inventories, and it isn’t pretty.

Dealer inventories have plunged by $166.6 billion since February 24. This is not simply repricing of the inventory. This is active, aggressive liquidation. We have reason to believe that it is forced liquidation. We know that because we know the degree to which this inventory was bought and carried with insane levels of leverage.

One chart in the report shows the scale of the drop, and relates it to the direction of Treasury securities prices.

Another shows total dealer Treasury collateral repo versus the yield on the 10 year note on an inverted scale. That shows the direction of Treasury prices relative to their total repo borrowings against their Treasury holdings.

Another chart shows all Primary Dealer net borrowings, which is the net of their repo and other financing from their reverse repo and margin lending operations. That’s plotted versus their total Treasury holdings. This chart is interesting because it shows the total amount of leverage employed against the only the safest collateral held.

Then there’s the mother of all charts. The chart shows a four year history of the direction of Treasury prices, overlaid with total dealer fixed income positions, and net dealer borrowings used to finance those positions. At the bottom is the ratio of the net debt financing to the total fixed income portfolio value.

The correlation between all 4 series is clear. The past is prologue. The implications are horrifying.

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FREE REPORT – Proof of How QE Works – Fed to Primary Dealers, to Markets, To Money

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This Monster is Poised to Explode

Lee Adler

The S&P has now broken through a long term uptrend line that dates from the 2014 peak.

All intermediate and short cycles remain in gear to the upside. There are updated projections on the 13 week cycle and 10-12 month cycle. They are eyepopping for bulls, and eye watering for bears.

The third rail chart is in a meltup. This report shows you its parameters.

Cycle screening measures continue to confirm the uptrend. They show no sign of reversal.

The chart pick list had an average gain of 3.3% with an average holding period of 11 calendar days (1.6 weeks) last week. I have adjusted trailing stop takeout prices for this week.

The current screen from charts as of April 9, had 41 total signals with 17 bullish signals against 24 bearish signals. I chose 4 of the buys to add to the chart picks this week.

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. 

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Technical Trader Special Report- This Week’s Swing Trade Picks

Lee Adler

Oh What a Tangled Web We Weave When First We Update a Spreadsheet from Fed Data

I got into a bit of a pickle this weekend when updating my Primary Dealer position and Financing charts. The spreadsheets that I use to create them are massive aggregations of multiple New York Fed data tables. I need to create dozens of linked tables to collect and aggregate that data into two coherent story telling charts.

I made one small change in one of the two workbooks by adding a couple lines to accommodate an extra week of data. Simple, right? That caused a series of cascading errors in the two linked worksheets. The New York Fed doesn’t make it easy, to aggregate this data. In fact, they make it nearly impossible, which is probably why I’m the only one crazy enough to try this at home.

I didn’t realize the error until I was finished and looked at the chart. It was trash. It was all trash.

I spent 3 hours, until midnight last night, rebuilding all of it, after spending 3 hours building it. So I don’t have a finished report on that data as I had intended, nor was I able to get to the technical report on Sunday night as I usually do.

That’s my sob story excuse for presenting the Technical Trader report for you in two parts this morning, which may be a better way to do it anyway. 😀 First, I’ll start with the chart picks, herein. I’ll get the technical market overview out to you well before New York opens.

If I’m lucky, I’ll get that Primary Dealer report out to Liquidity Trader Money Trends subscribers this morning also.

Thanks for your commiseration and support!

Lee

And now, on with the show.

Technical Trader subscribers click here to download the report.

As a thanks to Liquidity Trader Money Trends subscribers for your patience, here’s a link for you to download this report, if you’re interested.

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. 

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Gold – Finally Some Good News

Lee Adler

The good news is that the 13 week cycle up phase now has a projection that indicates some upside. The bad news is that that projection won’t break the downtrend. Here’s what needs to happen for sustained good news.

Meanwhile, last week’s swinging miner picks did well, and I added one more for good measure, despite low expectations.

Subscribers, click here to download report.

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

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Stimmy Gonna Leave Its Mark… In Bond Trader’s Underwear

Lee Adler

Back on February 5th, I wrote in this report:

The withholding data strongly suggests that more stimulus isn’t needed. As vaccine distribution widens, the economy should heat up on its own. Any additional government juice will heat it up even more.

What the unintended consequences of that will be, we can only guess. Here’s one guess. Institutional balanced fund managers will dump Treasuries and buy stocks.

That will first lead to a blowoff in stocks, which seems to be underway now. But a collapse in the bond markets that’s not offset with equal profits for Primary Dealers from stocks, could lead to a crash in stocks too.

I repeated that message in early March based on the February tax data.

So we knew very well that blockbuster jobs numbers were coming. The BLS (Bureau of Liar Statistics) may lie sometimes, but the tax data doesn’t. All you need to do is look at it. Wall Street eConomists can’t be bothered.

The US Treasury is kind enough to report its tax collections to us EVERY SINGLE DAY, one day after it is collected and counted. Who could ask for better data than that? Pure, raw, unmanipulated, hard data, that not a single Wall Street, or academic, eConomist pays any attention to.

Instead, they watch the heavily manipulated, after the fact, subsequently massively revised, government economic data. Then they spin it to fit their narrative. Wall Street has something to sell you. Academic eConomists are either selling, acting as paid shills, or are simply on ego trips.

There are a handful of good ones out there, and some who are doing serious research, I guess. We don’t hear about them. But the ones who show up repeatedly in the Wall Street media are shills often getting paid to represent a certain political or business point of view.

Conversely, we focus on the hard data. No interpretation needed. It is what it is. Compare this year with the same period last year. Put it on a chart or two. See how that comparison is moving along month to month. And you know EXACTLY what the economy is doing in real time without having to guess what some lying liar eConomist is trying to sell you.

In March, withholding taxes rose at the same rate as in February, which was very, very strong. I show you the trends via a nice chart and a couple of tables in this report, and I tell you what it means for the Treasury market, and what it implies for stocks.

And that is that we are headed for a big cliff. Enjoy the party while it lasts. I’ll tell you when we’re near the cliff.

Subscribers, click here to download the report.

Available at this link for legacy Treasury subscribers.

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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Stock Market Says, Here Comes the Judge, All Rise

Lee Adler

The 6 month cycle up phase reasserted itself last week.

All of the short term cycles up to 13 weeks resychronized with the 6 month cycle upturn. Cycle projections rose across the short term and intermediate spectrum. I also ran the regular quarterly update of long term projections. They also rose.

I should point out that those long term projections first pointed toward the market reaching 3900 last July, and pointing to 4000 in October, when the S&P was at 3300. We should not take the fact lightly that they now point higher still.

The swing trade chart picks list showed a small gain of 1.2% on average with an average holding period of just 4 days, as all but one pick, were new. This weekend I chose 4 new picks which appeared to have good potential for a decent sized swing move. All were buys.

The current screen had an impressive 75 bullish signals against just 8 bearish signals. But that’s less than half of last weekend’s buy signals. This diminution is normal as a trend progresses. The current numbers are still relatively large, suggesting that we remain in the early stages of the move.

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. 

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Gold – Bad News, Worse News

Lee Adler

The bad news is that the 13 week cycle up phase has been weak, and is on the brink of failure. The worse news is that the 9-12 month cycle low is now overdue, and the projection points lower. Much lower. However, a couple of the miners show signs of potential upturns. I have featured charts of those in this report.

Subscribers, click here to download report.

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

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Animal Spirits are Waning and Money is Disappearing

Lee Adler

In past reports I’ve covered the fact that the proximate cause of the US Treasury’s massive intervention in the Treasury market is the crash in Treasury bond prices and not yields. Dealers are underwater. They’re drowning. And surprise, surprise, they have engaged in more stupid behavior of the kind that causes systemic crashes.

Why are we surprised?  These same Wall Street Mafiosi are behind every financial crash, and they are never held responsible. Quite the contrary, the Fed bails them out and rewards them for their disgusting, criminal malfeasance and wild gambling with other people’s money.

The financial system with the Fed as corrupt cop on the beat, stinks to high hell, but it is what it is. We just have to understand their corrupt rules and play by them in order to preserve and grow our capital. Understanding that game meant that we’ve had to be bullish most of the time for the past dozen years.

Sad.

The full report is reserved for subscribers. 

Click here to download the complete report.

Not a subscriber? Read on. There’s more for you too on the next page.

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Play Ball! Stock Market Swings For the Fences in Season Opener

Lee Adler

Friday’s rally appears to support that we’re in the early days of a 6 month cycle up phase. We have been expecting it in this time window.  Ditto for the 10-12 month cycle, which has been trending anyway. Those two cycles should now be in gear to the upside for a few months. This would normally cause shorter cycles to resync from that low, and also to have extended uplegs.

This weekend’s screens of some 9000 listed stocks generated a whopping 163 short term signals from key levels. An equally impressive 155 were on the buy side. Furthermore, three of the sell signals were on inverse ETFs. Therefore 158 signals were bullish. Only 5 were bearish. This suggests a big turn with lots of thrust. It’s consistent with a 6 month cycle upturn.

But I was underwhelmed when I viewed those charts. Most were ambiguous. This doesn’t give me enough to conclude that we’re going to have a sustained power move.

From my visual review, I chose 8 charts which appeared to have good potential for a decent sized swing move. All were buys. If this works out as it should, we’ll get 2 or 3 runners from this group while the rest have small gains or small losses.

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. 

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Going Going Gone- We Now Know When The Party Will End

Lee Adler

On February 23, the US Treasury pumped $55 billion in cash into the accounts of Primary Dealers, banks, money market funds, and other institutions who had held the T-bills that were expiring that day. These redemptions began the US Treasury’s series of massive, twice weekly paydowns of the US government’s short term debt.

The purpose of the paydowns was twofold. First, the Treasury is required by the current budget law to whittle down its cash from a peak of $1.8 trillion last year, to $133 billion by August.  Treasury Minister Janet opted to start the process by paying down existing short term debt.

That accomplished the second goal, which was to force holders of the expiring paper to buy longer term debt. Despite their protestations that all is well, economic policy makers know that the crash in Treasury note and bond prices is causing a crisis in the Primary Dealer system.

Minister Janet works very closely with Lord Jaysus of the Fed, of course. They expected that the T-bill paydowns would help to reverse the decline in the prices of Treasury notes and bonds by forcing cash into the accounts of dealers and investors. It didn’t work. At least not to the extent that they needed. The full report is reserved for subscribers. 

Click here to download the complete report.

Non-subscribers, there’s more for you too! So read on!

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