Posts Tagged ‘Precision Capital Management’

Can Money Supply Tell Us How the Funny Money Rally Will End?

Can Money Supply Tell Us How the Funny Money Rally Will End?

funny moneyCourtesy of Damien at Wall Street Cheat Sheet

This is a guest post by Precision Capital Management.

While much has been made of the expiration of the Federal Reserve’s $300 Billion quantitative easing program, there are still many more ways in which the Fed can pump the markets with liquidity that need never be paid back to the recipients.  In this article, we take a look at the ramifications of some recent developments with regard to the Treasury and Federal Reserve that will again provide fodder to the equities markets, as well as revisiting our previous work on how money supply has impacted the economy and what it tells us of the potential correction down the road.

As we wrote two days ago, Treasury is effectively winding down its Supplemental Financing Program, the stated intention of which on its inception in September 2008 was to, “drain reserves from the banking system, and therefore offset the reserve impact of recent Federal Reserve lending and liquidity initiatives.”  Delving into the mechanics of it, here is what happened:

Treasury announced special auctions for cash management bills, the proceeds of which were placed on deposit with the Federal Reserve in a special account (as opposed to the proceeds being kept by Treasury to fund the government).  This allowed the Federal Reserve to use these funds (which topped out at $558.9 Billion in November 2008) to borrow or buy securities primarily from banks and broker dealers to help “unfreeze the credit markets.”  The Fed could have simply borrowed or bought securities with money it printed, but this would have expanded its balance sheet by creating excess reserves in the accounts that banks are required to keep with the Fed.  These reserves can be multiplied by at least ten times and used by banks for lending.  At the time, the Fed was rightfully concerned about inflation becoming unmanageable once the credit markets thawed, and about being able to keep the Fed overnight lending rate (fed funds target rate) above zero.  Accordingly, Treasury’s SFP helped to keep the Fed balance sheet under control (if you can call a multiple hundred percentage increase “under control”).  The amount of money that flowed into the financial markets from the SFP was the same as it would have been had the Fed printed the money; however, SFP…
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Chart Junkie: Gold from Several Perspectives and Unemployment

Chart Junkie: Gold from Several Perspectives and Unemployment

Courtesy of Damien Hoffman at Wall St. Cheat Sheet  

Chart Junkie

 

Gold long term

“The Professor” Corey Rosenbloom at Afraid to Trade offers us a longer term look at Gold. Although it’s breaking out on the shorter-term charts, the chart above clearly indicates there exists resistance above which must be cleared for the next bull rally to run. (Source: Afraid to Trade)

gold in currencies 9-4-09_small

Gold Priced in Multiple Currencies

Precision Capital Management offers a very interesting look at Gold priced in multiple currencies. They state: “Gold is one of the leading indicators we follow at our website.  Everyone seems to have noticed the spike up this week in gold, but how do we determine if the move is real, or merely a fakeout?  To confirm that gold is advancing on its own merits as part of a longer term move, which is not the result solely of US Dollar weakness, we want to see confirmation of an up move in gold priced in other currencies.  Above shows gold priced in the Canadian Dollar (CAD), Australian Dollar (AUD), Japanese Yen (JPY), and the Euro (EUR).  When gold began its last advance in November 2008, the move was confirmed by higher lows in the commodity currencies of the CAD and AUD, as well as the EUR (even though there were lower lows in the JPY and USD gold).  Eventually, there were higher lows in the JPY and USD gold at the beginning of December 2008.  Accordingly, for the gold bull case, early confirmation would be to see current lows in AUD, CAD and EUR gold respected on the first pullback (especially in the former two as they are commodity currencies), preferably accompanied with a break through overhead resistance.” (Source: Precision Capital Management

Gold with Fibonacci Indicators

Gold with Fibonacci Indicators

Our partners over at RatioTrading bring us yet our third and final perspective on Gold: “As demonstrated in this chart, Gold has historically respected key Fibonacci Ratio levels and with Gold retesting all time highs, where could it be headed?  Well as we look historically over the past year or so we see that in many instances when the GLD broke out and made a new low, it went right to either a 1.272 Fibonacci extension ($73)…
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Are Markets Being Manipulated?

Are Markets Being Manipulated?

Courtesy of Damien Hoffman at Wall St. Cheat Sheet

Federal Reserve Federal Reserve

Conspiracy theories are nearly as old as the first human thought. However, there is a valid demarcation between presenting a collection of compicated facts as opposed to connecting stars from across the Universe.

Bob English and his team at Precision Capital Management recently distributed a buzz-worthy report entitled, “A Grand Unified Theory of Market Manipulation.” With a healthy dose of skepticism and understanding that the “Invisible Hand” is actually semi-transparent, I asked Bob to put his theory on the anvil so we could see which quality sword emerges …

Damien Hoffman: Bob, your team recently released an interesting report entitled, “A Grand Unified Theory of Market Manipulation.” Could you summarize this report for us?

Bob English: There’s an episode of an American sit-com I remember seeing years ago that featured a kid played by Ricky Schroeder and a grandfather played by the inestimable John Houseman — who, interestingly was a grain speculator until the 1929 crash wiped him out.  They decided to corner the baseball card market for Tommy Lasorda cards by buying all they could, then planted rumors that he was a shoe-in for the Baseball Hall of Fame.  The scheme worked at first as they were able to sell the cards for high prices that they could set.  They owned the supply and created artificial demand.  However, in the end, Tommy Lasorda dumped a carton of his own cards on the market, collapsing their prices.  As a side point, there never was a good explanation given why Lasorda did this.

Anyway, in the current situation, instead of baseball cards we have US Dollars, and the US government controls the supply.  If the government increases supply slowly and encourages demand, the Dollar’s price erodes over time but most people don’t notice.  The real threat is a Tommy Lasorda in the form of China or Japan coming in and dumping the cards (i.e., Dollars) onto the market at once.  Those Lasorda’s don’t want to do this, but there is a point that can be reached at which they would — for example, if they saw their investment in US Dollars about to become worthless and thus had little to lose.

At the same time, everyone has a vested interest in a rising stock market.  It…
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Phil's Favorites

Will Bitcoin Crash the Stock Market?

 

Will Bitcoin Crash the Stock Market?

Courtesy of 

When the S&P 500 fell in March last year, it brought Bitcoin down with it. So if stocks can bring down Bitcoin, it’s reasonable to ask if Bitcoin can bring down stocks.*

If you thought the Bitcoin run-up to 60k was emblematic of investor** euphoria, then you probably wondered what would happen if it were to come crashing down. Would that take other high-flying areas of the market down with it?

It might be premature, but as of now, the answer is no.

...



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Digital Currencies

Will Bitcoin Crash the Stock Market?

 

Will Bitcoin Crash the Stock Market?

Courtesy of 

When the S&P 500 fell in March last year, it brought Bitcoin down with it. So if stocks can bring down Bitcoin, it’s reasonable to ask if Bitcoin can bring down stocks.*

If you thought the Bitcoin run-up to 60k was emblematic of investor** euphoria, then you probably wondered what would happen if it were to come crashing down. Would that take other high-flying areas of the market down with it?

It might be premature, but as of now, the answer is no.

...



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Zero Hedge

Disappointing 2Y Auction Tails As Yield Jumps To 15 Month High

Courtesy of ZeroHedge View original post here.

Short-term rates moved sharply higher after last week's technical tweak by the Fed which pushed the IOER and RRP by 5bps to 15 and 5bps respectively, which had a downstream effect on all short-term yields, and today's 2Y auction was a case in point printing at 0.249%, the highest yield since March 2020 and a 0.5bps tail to the When Issued 0.244%. This was the biggest tail on the 2Y since July 2020 when the auction tailed 0.9bps.

And yet today's 2Y auction wasn't all bad: the bid to cover dipped from 2.736 to 2.540 yet even so it was right on top of the 6-auction ...



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Biotech/COVID-19

COVID-19: why lab-leak theory is back despite little new evidence

 

COVID-19: why lab-leak theory is back despite little new evidence

...



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Chart School

RTT Plus Bulletin

Courtesy of Read the Ticker

RTT Plus private blog answer these questions over the last two weeks.

Ending: 2021-06-19

- Metal stocks very bullish after gold smash
- FED taper talk vs Basel 3
- Dollar devaluatioin before end of 2021
- COVID, Vaccine insight (off topic)
- The next play for the deep sate (off topic)
- The debt loaded USA can not break these economic stats


RTT Plus membership required to review.

RTT Plus members can include chart building services if you wish. If you you do not want chart building services select 'RTT Plus' only during the membership sign up process.

Sign up now!






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Politics

The Ukraine Fallacies (with Victor Rud)

 

The Ukraine Fallacies (with Victor Rud)

Americans are confused about the history of Ukraine. That's just how Russia wants it.

Courtesy of Greg Olear, at PREVAIL

Greg is the author of Dirty Rubles: An Introduction to Trump/Russia 

...

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Promotions

Live Webinar with Phil on Option Strategies

 

June is TD Bank's Option Education Month, and today (Thursday, June 10) at 1 pm EST, Phil will speak with host Bryan Rogers about selling options and various option strategies that we use here at Phil's Stock World. Don't miss this event!

Click here to register for TD's live webinar with Phil.

 

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Kimble Charting Solutions

Crude Oil Cleared For Blast Off On This Dual Breakout?

Courtesy of Chris Kimble

Is Crude Oil about to blast off and hit much higher prices? It might be worth being aware of what could be taking place this month in this important commodity!

Crude Oil has created lower highs over the past 13-years, since peaking back in 2008, along line (1).

It created a “Double Top at (2), then it proceeded to decline more than 60% in four months.

The countertrend rally in Crude Oil has it attempting to break above its 13-year falling resistance as well as its double top at (3).

A successful breakout at (3) would suggest Crude Oil is about to mo...



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ValueWalk

Managing Investments As A Charity Or Nonprofit

By Anna Peel. Originally published at ValueWalk.

Maintaining financial viability is a constant challenge for charities and nonprofit organizations.

Q4 2020 hedge fund letters, conferences and more

The past year has underscored that challenge. The pandemic has not just affected investment returns – it’s also had serious implications for charitable activities and the ability to fundraise. For some organizations, it’s even raised doubts about whether they can continue to operate.

Finding ways to generate long-term, sustainable returns for ...



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Mapping The Market

Suez Canal: Critical Waterway Comes to a Halt

 

Suez Canal: Critical Waterway Comes to a Halt

Courtesy of Marcus Lu, Visual Capitalist

The Suez Canal: A Critical Waterway Comes to a Halt

On March 23, 2021, a massive ship named Ever Given became lodged in the Suez Canal, completely blocking traffic in both directions. According to the Suez Canal Authority, the 1,312 foot long (400 m) container ship ran aground during a sandstorm that caused low visibility, impacting the ship’s navigation. The vessel is owned by Taiwanese shipping firm, Evergreen Marine.

With over 2...



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The Technical Traders

Adaptive Fibonacci Price Modeling System Suggests Market Peak May Be Near

Courtesy of Technical Traders

Our Adaptive Fibonacci Price Modeling system is suggesting a moderate price peak may be already setting up in the NASDAQ while the Dow Jones, S&P500, and Transportation Index continue to rally beyond the projected Fibonacci Price Expansion Levels.  This indicates that capital may be shifting away from the already lofty Technology sector and into Basic Materials, Financials, Energy, Consumer Staples, Utilities, as well as other sectors.

This type of a structural market shift indicates a move away from speculation and towards Blue Chip returns. It suggests traders and investors are expecting the US consumer to come back strong (or at least hold up the market at...



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Lee's Free Thinking

Texas, Florida, Arizona, Georgia - The Branch COVIDIANS Are Still Burning Down the House

 

Texas, Florida, Arizona, Georgia – The Branch COVIDIANS Are Still Burning Down the House

Courtesy of Lee Adler, WallStreetExaminer 

The numbers of new cases in some of the hardest hit COVID19 states have started to plateau, or even decline, over the past few days. A few pundits have noted it and concluded that it was a hopeful sign. 

Is it real or is something else going on? Like a restriction in the numbers of tests, or simply the inability to test enough, or are some people simply giving up on getting tested? Because as we all know from our dear leader, the less testing, the less...



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Insider Scoop

Economic Data Scheduled For Friday

Courtesy of Benzinga

  • Data on nonfarm payrolls and unemployment rate for March will be released at 8:30 a.m. ET.
  • US Services Purchasing Managers' Index for March is scheduled for release at 9:45 a.m. ET.
  • The ISM's non-manufacturing index for March will be released at 10:00 a.m. ET.
  • The Baker Hughes North American rig count report for the latest week is scheduled for release at 1:00 p.m. ET.
...

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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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