Lee AdlerCycle 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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Picks open as of the October close, or closed last week, showed an average gain of 11.6%, up from 7.5% the previous week, with an average holding period of 30 calendar days, up from 24, the previous week. Past performance does not indicate future results.
Buy setups were again predominant. Setups are not guarantees. They are valid only when short-term signals follow. Therefore, the next screening layer looks for short-term trigger signals from within the stocks that have met the setup criteria.
On that basis, the results this week are as follows:
Market averages continue to respect their long- and intermediate-term uptrend channels, with momentum and cycle indicators still aligned xxxxxxx. There is no evidence yet of a completed top or imminent reversal. Momentum across major cycles supports continuation of the equity uptrend into xxxx xxxx, with targets extending toward xxxx on SPX.
Gold has exceeded long term trend limits. In the short run, the 4 week cycle has reached its projection, but the 13 week cycle still points to xxxx, ideally due by xxxxxxx xx. Closing below xxxx next week would be needed to break the uptrend. The gain in miner swing trades is now 44.7% over an average holding period of 8 weeks. With the charts now extended, I have added trailing stop recommendations.
Massive Treasury issuance, repo expansion, and leveraged basis trades have fueled both economic strength and equity gains, but extremes in valuations and leverage point to rising risks of reversal.
I track weekly real time cash flow data from the Fed and Treasury that foretell the next moves in stocks and bonds.
Buy setups were again predominant despite last week’s pullback. I am adding 1 new buy side pick this week and adding stops to 4 existing picks, plus a limit sell on another. Current performance is an average gain of 7.5% on an average holding period of 24 calendar days. Past performance does not indicate future results.
Table of picks and charts in subscriber report.
The market remains in established uptrend channels. Longer-term cycles continue to project higher, with a projection of xxxx on the 10-12 month cycle, while short-term corrections look mild. Breadth is narrow, but no decisive breakdown signals are evident.
The only cycle with a current projection is the 13-week pointing to a high of xxxx, due within the current few weeks. The price would need a daily close below xxxx by the end of next week to break the uptrend. Cycle channel resistance will be approximately xxxxx at the end of next week. Miner swing trade picks remain a hold, with an average gain of 31% on an average holding period of 7 weeks.
Picks open as of the September 19 close, showed an average gain of 12%, down from 12.4% the previous week, with an average holding period of 27 calendar days. 8 of the 10 picks had gains.
Trade Selections and Adjustments
4 new picks, 3 longs and 1 short
Closing 1 pick, adding 1 limit sell
9 prior picks will remain open this week
3 with stops
The S&P 500 remains within powerful uptrend structures, with cycle projections aligned higher into year-end. Key resistance levels are near, but momentum and long-term cycle signals continue to favor the upside. The 10-12 month cycle projects to xxxx in xxxxxxx.
All cycles have entered or appear about to enter corrective down phases. Trend support is in the xxxx range for the week ahead. That needs to hold to keep the uptrend intact. If it holds, then a run to xxxx could follow. If it breaks, then a drop to support indicated around xxxx would be likely. But it is the long term charts that suggest that the greatest risk is building. There are no changes to miner swing trade chart picks, now showing average gains of 16% over 6 weeks.