Lee AdlerU.S. equities continue to hold within strong uptrend channels across all time frames, yet the advance is showing signs of internal strain. The S&P 500 remains in a steady short-term uptrend after new highs in late October, but cycle-screen data reveal that participation has narrowed sharply. The indexes stay firm, while many individual stocks have slipped into short-term down phases.
This report examines the mechanics of the ongoing liquidity-driven bull market and its growing systemic fragility. It argues that the U.S. Treasury—not the Federal Reserve—is now the de facto “money printer,” with repo financing transforming government debt issuance directly into spendable liquidity. The cycle of Treasury issuance, hedge-fund basis trades, and repo leverage has fueled both economic expansion and asset price inflation, pushing valuations toward bubble-era extremes.
The smash last week and this morning broke cycle channels up to xx xxxxx duration. However, the xx xxxxx cycle up phase remains intact for now. That would not prevent a continued sharp correction. Gold would need a close below xxxx to form a clear top pattern that would suggest the end of the xx xxxxx cycle up phase.
U.S. equities remain in a fully engaged up-phase across multiple time frames, with all major cycles now synchronized to the upside. The S&P 500’s breakout to new highs confirms continuation of the rally first signaled in mid-October, while short-term and intermediate cycle structures indicate further potential into Xxxxxxxx and Xxxxxxxxx.
During the week ended Friday, October 17, out of 1899 stocks meeting institutional price and volume criteria, the screens produced the following results :
Picks closed since September 9 showed an average gain of 7.6% on an average holding period of 29 calendar days. Currently open picks have an average gain of 3% on an average holding period of 22 calendar days. This compares with a gain of 2.2% in the S&P 500 since September 9. Past performance does not indicate future results.
The market is at a pivotal juncture for U.S. equities as the S&P 500 hovers near key technical thresholds that will determine whether the recent rebound evolves into a renewed uptrend or fails into a deeper correction.
I have been around long enough to have lived and traded through a parabolic extreme move like this in 1979-80. Do I believe that this is like that? Yes. It did not end well, but tops, even parabolic blowoff tops, take a few months to complete. The cycle projection on the 9-12 month cycle is doable, provided that any pullback holds above xxxx-xxxx. Any pullback below that would probably reduce the final target of this move.
Dealers’ shrinking holdings, depleted cash, and reliance on leveraged hedges show that current market stability rests on repo financing rather than balance sheet expansion. The system remains vulnerable to any funding or sentiment shock.
The bullish fever broke on Friday, and today’s list of new additions to the list shows the effect. However, Friday’s break was driven by a statement made by President Trump. Picks closed since September 9, or open as of the October 10 close, showed an average gain of 8.5%, which is a drop from the 11.6% gain the previous week. This compares with a gain of 0.5% in the S&P 500 since September 9. The average holding period was 32 calendar days. Table below.
Seeing the pre-market rebound this morning, I have to admit this is one of the toughest calls I’ve faced. Did Friday’s Trump-triggered selloff truly break the market—or not? At this point, I can’t say with confidence. Based strictly on Friday’s price and indicator patterns, the uptrend was broken. But today’s early recovery could still repair the damage if it carries just a few points higher from the current 6644 level. As Europe opened around 3 AM NY time, the S&P was already testing 6660—the threshold I identified as critical to re-establish the uptrend.
For now, we wait to see how the session resolves. Ideally, that clarity comes today.
Cycle projections for the 13 week and 9-12 month cycles have been reached. Indicators suggest the onset of down phases in shorter cycles, but it’s not clear that these will turn down in absolute slope. It would appear to mark only the beginning of top formation. We are taking profits in miner swing picks as gains have averaged 43% over an average holding period of 2 months.
September’s Treasury data shows headline revenue strength masking a deeper slowdown. Withholding taxes remain in their normal cyclical range, but real growth is flat once wage inflation is factored in. Tariffs are propping up receipts even as they squeeze corporate profits and the deficit widens. Repo financing and basis trades continue to feed the rally. Consider that the bull market is supported by artificial financial engineering, not fundamental economic growth, or even conventional central bank money printing.
This report shows you the real data, and shows why the consensus tends to be wrong, and suggests the best investment strategy for dealing with the narrative versus the hidden facts.
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