This Is Easy!

Thursday, July 2, before the open. US stock futures are UP. Of course they are! And why? Get this:

https://www.cnn.com/2020/07/02/investing/premarket-stocks-trading/index.html

You only need to read the headline… “This data shows the Great Reopening may have stalled“

That’s BAD news, right? Sure, but that makes it GOOD news to the markets, right? Whaaaa?!?!?!? You know, BAD NEWS = More Stimulus!!! Whoohoo!

So, there you have it, folks… The music plays on, and another chair or two is going to be pulled out. You may certainly play it, if you want, as I have said now, a number of times. The FED has spoken, and it has said… “You WILL have a Bull Market!” The fundamentals be damned!!!

Do not get caught… when the music stops, or in this case, when the Fed takes the “punch bowl” away, or runs “out of ammunition,” of which it says it has an unlimited supply of…

Hmmmmmmmmmmm, let’s see how that’s all going to work out for the markets and all the world. I choose to observe rather than participate, except a bit around the edges here and there. As this can only end badly… There is a massive bubble being expanded by all the central banks of the nations of the world, trying to stave off deflation, a recession, and perhaps, an all-out depression… IF that is NOT so, why all the Fed intervention, stimulus, and manipulation… If it is not DESPERATION!

Harold

Did You Like That?

Wednesday, July 1, before the open. So, it happened again. We got the nice rise in stocks, AND the volume wasn’t bad either. It was greater, but still did not exceed that which accompanied the big down days before it.

The Bearish Island Top is the obstacle. It is huge. There’s the gap up to it. There’s the 4 days of it; those being 6/5, 8, 9 and 10, and then, there’s the gap down from it. After that, there are 4 big sell-off days after it… because that was a Bearish Island Top! Those 4 big sell-off days are, 6/11, 6/19, 6/24 and 6/26. The FED has back-stopped the markets openly, and with TONS of newly created money. We don’t even need to mention 5/14 anymore, as that’s so far back in the rear-view mirror. The latest open manipulations were 6/15, 6/25 and Sunday, 6/28… With promises of more from Jerome Powell. I’ve written of all that in previous posts below.

The Fed is saying, “We WILL have a Bull Market!” And, I’m only saying… Not based on fundamentals. Not based upon actual economic soundness and health. Friends, the Fed is doing everything to prevent a sell-off panic, and… an economic depression. If the numbers about to come out, beginning in about 10 more days, do not announce that we are in a serious recession slump, and slow recovery, that in no way justifies these market numbers… then WHY all this Fed intervention, market manipulation, and money creation??? IF, the Fed knows the upcoming economic and corporate earnings reports will be, shall we say, “encouraging,” WHY all this action on their part?

It makes 0 sense. The Fed is inflating an asset bubble, and creating among the investment and trading communities the two new expressions, minted in recent months… FOMO and TINA. The Fear of Missing Out, and, There Is No Alternative.

Well there is. You can try to trade this. I’m not much of a trader. And, if I did, I’d go with ETF’s of the market… on the NASDAQ and/or the S&P 500. But, I’ve been making ours in the precious metals, where the ‘fundamentals’ being created by the Fed truly support the case for their current prices… and, likely, higher prices to come besides.

I’ve placated the wife. She had said she was wanting the unneeded portfolio dividend income… I said I would derive it by means other than dividends. We knew what the income figure was, before we sold, and I’ve more than accounted for that with our metals gains. She’s satisfied with that…. Phew!

Every trader now knows to place his stops under the Fed-created ‘support,’ which obviously stands at the 200-day moving average line for the 500. The last 3 days of Fed intervention, all in June… the 15th, 25th and 28th, are all at, or just under it. You want to play this… you can try doing the same. I made our June income in metals. Plan to make it for July in the same manner. I’ll update the timer, but until I can get signals indicating low market risk… It is dangerously high right now!

Harold

More of the Very Same BS!

Tuesday, June 30, 10:17 am EST. I post here, and on a gold stock blog here: https://goldstocktraderblog.wordpress.com/

Much I say there, applies here, and vice versa. And, I just saw this and immediately realized that it is exactly what I have been saying, and truly, ALL that is propping this market up. The very fact the Fed backstopped stocks last Thursday… the market collapsed Friday, many hundreds of points and on big volume… The Fed stepped up again Sunday overseas, and got the pop at the end of Monday, which was described as due to… “Hopes of additional stimulus measures sent the U.S. stock to a higher close.”

Then, this morning… I see this: “Jerome Powell said in prepared testimony the central bank still has plenty of room to support the economy.”

And, what do we see today? The markets are waiting, and they are saying… So, give us MORE already!!!

It is sick and pathetic. The Fed is going to have to deliver, or the markets will spank the Fed!

My technical analysis of the recent market action below… The gaps and the Bearish Island Top still stands… and, until the FED can make that fall, there is BIG trouble staring the world right in the face… and, the Fed is already BLINKING repeatedly!!!

Harold

It DOES Work!

Monday, June 29, after the close. The Fed can do what it does, and there’s a Wall Street adage that goes with it… You know it already, “Don’t Fight the Fed!” And, so, we see the Fed, having intervened Monday the 15th, Thursday the 25th, and then, again, Sunday the 28th, overseas……. Managed to get another ‘positive’ result in the stock market today. They scare me!

So, here’s what may well happen……. They’re going to precipitate another strong rally… because that is what they want. And, they’re wanting to launch it from here. And, they KNOW they must take out the gaps and very Bearish Island Top I have pointed out. And, by God, they’re going to do it no matter how much ‘money’ they have to create to do it! I mean it. This is the Fed’s obvious goal.

They will not let the market fall away. They’re backstopping every decline, and they’re intent on holding the 200-day moving average of the S&P 500. That is not what they have announced, but you can see it plain as day. They announce that they have acted, and you see right where they’ve thrown down the gauntlet, and you can see in the chart what it is that they must be looking at, and figure why they’re doing it.

If this were not so… why do they announce what they have done, as news to the world, immediately after they have done it???

Must be time to put on a long trade! What will the stock futures look like overnight, overseas, and by tomorrow morning? I’m going to look at those points again, to make certain they are right where I have just said they are… consider a long idea, and use the Fed’s own stop… as MY stop-loss point, just a bit underneath it! I’ll add this, too… If traders are seeing, and doing the very same… what do you suppose would likely happen, if stocks were to get driven down to below the Fed’s ‘line in the sand’? Just how many other’s stop-losses might be there?!?!?!? ——————–

9:00 pm EST update. Hunh, look what I saw… “Hopes of additional stimulus measures sent the U.S. stock to a higher close.” No kidding? Just what I had said. Don’t. Fight. The. Fed. That’s what that says.

Harold

… And, AGAIN!!!

Monday, June 29, before the open. The FED has interfered in the markets again, over the weekend, in order to MANIPULATE them… One more time! See this:

“London (CNN Business) Coca-Cola. Berkshire Hathaway. Marriott. Philip Morris. Walmart. These are just some of the companies whose debt was snapped up by the Federal Reserve as of mid-June, part of the central bank’s unprecedented intervention in credit markets. CNN parent company AT&T is another.

What’s happening: The Fed disclosed hundreds of millions of dollars in purchases of individual corporate bonds on Sunday, while identifying nearly 800 eligible issuers whose bonds it could buy down the line. The action by the Federal Reserve has been lauded by investors for easing conditions in credit markets after they rapidly deteriorated in March, avoiding a potentially catastrophic corporate cash crunch that could have triggered a wave of bankruptcies.” (all italics are mine)

You just KNOW this is going to end well, right? Natural laws of economics and finance mean nothing anymore………. My friends, there is something systemically wrong! It literally started last September or October in the overnight repo market. I saw it then. I wondered and asked what it could mean. Saw nothing in the markets to show that it actually meant anything… But, now, it’s all becoming clearer. The system is sick, and it is getting sicker.

What does it mean? The Fed is NOT the federal government. It is a consortium of private banks, united as a central bank, given authority and control over short-term rates and money supply. When it buys bonds, it is buying the debt of bond issuers who are borrowing from bond holders. IF they cannot service their debt, they are in default, and maybe bankruptcy. At that point, the corporation falls into the hands of their new owners, the bond holders, who then own, control, can dissolve or re-organize the company assets as they see fit.

The US Gov’t can borrow and spend from the Fed, until it can NO LONGER service that debt, and, it, too, can ultimately fall into the hands of the ownership of the banks that make up the Central Bank of the Federal Reserve. At which point, central control of the United States could possibly occur??? Nah… unthinkable!!! —————————–

9:15 am EST update. See how that neither stocks nor metals are hardly moving a bit? No market response to the big Fed action of Sunday… Why? What does that mean? Is the market saying to the Fed… Not enough! We want even more?!?!?!?

Harold

The FED Interferes Again!

Thursday, June 25. Why is the stock market holding up?!?!? The Fed is interfering and manipulating again! Here’s the news from a professional trader posted 10:03 am this morning…

“So far the S&P 500 level at 3,000 is holding. We’ll see how this ends today/tomorrow.

What is interesting is that Financials are POSITIVE on the day. And this is with yields trading down. This is a correlation change on all down days so far this entire year – that is worth noting. Whenever I see this type of outlier I have to dig deeper…

Then boom – a headline comes out that banks are getting looser regulations and a $40 billion swap line – “someone” got that message this morning ahead of everyone else.

Regardless, this should provide a short-term relief rally. I’ll be watching to see how this price action shakes out. It is likely to fit one of the scenarios I outlined yesterday or earlier this morning.”

Who is it that regulates the banks, and loosens or tightens their regulations… Oh, yeh, that would be the Fed! ————-

Confirmation, and more, from a trusted news source: “U.S. regulators eased some post-financial crisis restrictions on banks, likely freeing up billions for investment. Markets spiked late in the day on little news, though the New York Federal Reserve announced would purchase $80 billion in Treasurys over the next month.” No worries!

Harold

If You Have Not Figured It Out…

Wednesday, June 24, 10:19 am EST. I have been incredibly busy, but my previous posts stand! What do I mean? I wrote of the 4-day Island Top of the 500, and of the gap UP to it, and the gap DOWN from it. Then we saw, and I explained, that because the market was FAILING, the FED had to step in to undergird it on Monday of last week. But, just see what they got for their multiplied billions of dollars worth of effort…

The market neither rose above the Island Top, so as to negate it, nor did it even so much as close those 2 gaps to the Island Top… which is severe overhead resistance.

Every savvy trader KNOWS that the chart pattern of 6/3-12 is a very Bearish Island Top. And, since the Market is NOT willing to overcome it, and the FED cannot induce the market to overcome it…

The issue NOW is, will the FED try to intervene again, with MORE… Or, will real market forces prevail, and call it… Game Over??? We’re going to learn of this very soon… and, if you don’t think that is what is going on right now… Only look at what is going on with gold, and you will see that money is slipping away from risk assets, like stocks, to ‘insurance,’ like gold. 😉

Oh, and since the FED drew a line in the sand just under the 500’s 200-day moving average, what do you suppose they’re trying to prevent? Ummm, 500 above the 200-day = Bull Market, but 500 under its 200-day = BEAR! The “ball” is now in the Fed’s court… are they going to act, and muck everything all up again, like they did 3/23 and 5/14, when they intervened 2 other previous times? Each time got them a lesser result… this last time got next to NO results! Hmmmmmmm……………

Harold

No Worries?

Saturday, June 20. This helps to understand…

“The Fed Rescues the Market Again

Once again, Wall Street’s knight in shining armor—Federal Reserve chairman Jerome Powell—came riding in with bundles of money to save the stock market from peril. Sentiment had just begun turning negative again, as the reality of rising COVID-19 cases in a number of countries, including the southern and western parts of the U.S., was beginning to seep into the consciousness of traders. But have no fear, investors: Sir Jerome is here to protect you against any losses.The Fed had announced its corporate bond-buying program a while ago, but had done nothing with it yet, aside from buying some corporate bond ETFs. (That was Thursday, May 14) But as soon as the tiniest amount of market weakness showed, there was the Fed spending like a drunken sailor on leave, purchasing individual corporate bonds. The Federal Reserve will create a new index of non-bank corporate bonds that meet its eligibility criteria. The bonds included will have a maturity of less than five years and will be from American companies that were rated investment-grade as of March 22. Wall Street loved this plan, particularly after that sharp slide in stock prices late last week. Andrew Brenner, head of international fixed income at National Alliance Securities, told the Financial Times: “The market was on the verge of cracking. If the Fed hadn’t come in I think corporate bonds and equities would have broken down. The Fed has clearly put a floor under the market.” And to show he has a good sense of humor, Powell said this to a Congressional panel: “I don’t see us as wanting to run through the bond market like an elephant, or snuff out price signals.”But snuffing out price signals is exactly what the Fed is doing. This will lead to keeping alive numerous zombie companies whose debt burdens could have led to bankruptcy. And it sends a dire signal about the state of corporate America’s finances. To sum up this week in a few short words, the Fed’s “punch bowl” just keeps getting bigger and bigger. Little, if any, of the Fed’s largess will reach the people that really need the money most: America’s small businesses. It is these businesses that are responsible for nearly half of our country’s private sector jobs. The latest Federal Reserve Monetary Policy Report submitted to congress said: “The pandemic poses acute risks to the survival of many small businesses. Their widespread failure would adversely alter the economic landscape of local communities and potentially slow the economic recovery and future labor productivity growth. ”That translates to this: there is a longer-term threat that the massive stimulus will have failed to offset the damage inflicted by the coronavirus pandemic. But that is lost on Wall Street’s short-term traders who fail to distinguish between a near-term relief trade and the longer-term investment consequences of a “new normal” for markets and economies. What the traders are not grasping is that the Fed’s actions highlight just how worried the central bank is about indebted companies and the prospect of a long, slow economic recovery accompanied by high levels of small business failures and unemployed workers. Jay Powell was clear about this in his congressional testimony, telling representatives: “The longer the downturn lasts, the greater the potential for longer-term damage from permanent job loss and business closures.” Of course, no one cares at the moment about the long-term consequences from out-sized central bank action. The reality is that an overly indebted corporate America will weigh heavily on long-term growth prospects. Another major concern for the long-term is that the Fed’s recent actions strongly reinforce the feedback loop between the Federal Reserve and asset prices. That’s why, on most investment sites, you will see the same “Money printer go brr” meme again and again and again, posted by retail investors who think they cannot lose thanks to the Fed continuously pumping money into the financial system. Anyone who thinks the Federal Reserve can step back from its huge presence in our financial markets without causing a massive negative reaction hasn’t been paying attention. Think back to the “taper tantrum” of 2013 and the Fed’s policy tightening in late 2018 as just a preview of what will come down the road when the Fed tries to pull back from this unprecedented financial markets stimulus. The Federal Reserve seems to have adopted a wartime mentality. But that can backfire. If stimulus doesn’t rout the perceived enemy immediately, the Federal Reserve could easily get bogged down in a battle in which it loses its advantage. The Fed keeps wheeling around and managing to rally its cavalry troops for fresh charges, such as the corporate bond buying announcement this week. But increasingly, the cavalry is tiring, and the more this drags on the less impact the central bank’s repeated charges will have against the effects of the pandemic. And let’s not forget that, unlike other developed countries, our pandemic curve still hasn’t officially turned downward. Every six days, COVID-19 is still killing about as many Americans as were killed on 9/11. The overall death toll for the U.S. has now surpassed the total dead in World War I.”

But, never you worry, my friends… Remember, “Don’t Fight the Fed!!!” Monday’s Fed induced pop is already being frittered away… What can they do next?

Harold

Can You Smell It?

Saturday, June 20. This market has a strange smell about it. The Fed made a major corporate bond purchase Monday, which turned the market around and caused it to move up much as it did Thursday May 14. Monday was a great day. But, it’s been all distribution since, and Friday was not a good day. Granted it was options expiration day, and that can always cause volume and price anomalies, but Friday saw quite a bit of selling and, if you look at the intra-day, minute-by-minute, it looked quite dreadful. Especially the last five.

Then, on the other hand, a look at GLD, in the same manner, had a fine day, closing on its price high, and the volume in the miners was very strong, on average… some 70% greater than its 50-day average of volume.

Why was the Fed not able to “goose” the market into all new high territory? Why is gold looking to get some strength together to challenge its previous highs, and possibly breakout. Is it going to be “Game Over” for stocks? Is the “Hand-Writing on the Wall?” 2965 on the S&P 500 is the new line drawn in the sand where the Fed stepped in to buy, and is now SUPPORT.

Maybe it was just option expiration day, but it sure didn’t look like the Fed was able to make it go where they intended for it to with all of the manipulative stimulus they created Monday. All market gains from Monday’s action and news on their part… It doesn’t look to last!

Chart the 500 and see the gap up at Friday 6/5’s open and then the gap down open into Thursday the 11th. The four-day, 6/5, 8, 9 and 10, is called an Island Top. The gaps are a zone of resistance, and the Fed was not able to induce the market to even close or fill those gaps.

Next week is likely to be critical to the market. It must fill and close above the gaps, and get above the island. And, the 50-day is closing in on the 200-day for the possibility of a “Golden Cross,” which tends to be a very bullish sign.

So, close the gaps, and get above the island, or die? But, get up there, and the Golden Cross comes into play… calling for more buyers to allocate more money to stocks. The tension is quite high, and the next week or two should be quite interesting!

Harold

Is It Not Working Anymore?

Thursday, June 18, before the open. Okay, so we KNOW the Fed is trying to save the market. Not only has it been stepping in and undergirding it with corporate bond purchases, but it has even been announcing that it has been doing so! It did so back in the morning of Thursday May 14, as the market was looking to fall away… and that launched this massive Fed-fueled rally that got us to where we are today.

Then, only 2 days ago, back on Tuesday, the Fed did it again… and we can see the result. What has that been? Another massively huge rally of stocks into all new high price territory? Not exactly.

We got a one-day explosion, and the past two days, Wednesday and Thursday, have been clear days of stock distribution! Selling into the rally.

Now, here we are today, and there’s going to be 3 major reports released. Two at 8:30 and one at 10:00. Those 3 reports are likely to set the tone for at least today. Of great importance is the one Fed report on economic progress or circumstances. Will it be good… or maybe not so good?!?!?

Let me ask you this ONE question, and ask yourself if it might not be an indication… On Tuesday, the Fed felt the necessity to undergird the markets with a 3/4 of one TRILLION dollar corporate bond purchase… just 2 days before a major economic report release. Why would you do that IF the report was going to be good, hmmmmm? I’m sure I don’t know, but we will all know before this morning is done, I believe!

I will add, and close on this note… The futures are trading mildly off this morning. I suspect there is a holding of the breath, and a waiting on those upcoming reports at 8:30 and 10:00, before the real market action will get underway.

Harold