Friday Show Note

“Watch the close.” Is now the point to watch, and here’s why…

As I discussed today, it’s all about trying to figure out which message is “the message” the Fed wants to have interpreted as the most relevant to their viewpoint.

In other words: They are going to throw sh#t against the wall, a lot of it and different varieties, to boot, where they can then push forth, what they want, in the direction they want, then claim “See, we’re really doing what we said!” Even though what they said was both sides of an argument i.e., Yes we will, no we won’t, maybe today, maybe tomorrow, maybe never, etc., etc., etc. Also known as: Covering all the bases to cover one’s arse.

So, with that said, here’s what needs to be paid attention to going into today’s close of the “markets” where the lowly margin clerk rises to the most formidable position known to Wall Street as “The deal killer.” Meaning: at around 2 to 2:30pm EST they will deem what positions will be allowed to stay on the books over the weekend – and which will not. All based on risk parameters. And that “parameter” just became risky in deed.

In yesterday’s show note I brought up the premise that the Fed wanted to let Wall Street know, in no uncertain terms, that there was no “error” in Fed policy to be calculated as to whether or not they were going to raise rates. i.e., Fed. president Bullard made that fact crystal clear to those that were paying attention.

However, during the overnight sessions, up until this morning, “Wall Street” has continued with the “error” talk and some have gone as far as to literally hurl a few insults at Mr. Bullard in particular. The “markets” since then were reacting in a steady, if not positive, mode to such lambasting. (i.e., The Fed wouldn’t dare!)

Hint: The Fed just issued a “Au contraire, mon ami…” response that has big implications.

The Fed has just announced for Monday that it will hold an “Expedited, closed meeting” at 11:30amEST, “To discuss what?” you say. To wit:

(Image Source)

It looks like it was Mr. Bullard’s argument and sentiment the Fed wants to be known, in no uncertain terms. aka “You’ve now been warned, twice!”

Below is an updated chart of the one I’ve been using since Monday. It’s self explanatory as notated.

The thing to now watch for is how we go into the weekend, because as of this writing (approx 1:15pm EST) we have now broken another important trend-line via the short-term, and the levels (e.g., 1 – 2 -3) are now all within sight and in the direction of the lean. Again, to wit:

(Chart Source)

As always, we shall see. For the “markets” may say “We’ll wait till Monday and see what they’ll do, if they dare!”

But that lowly margin clerk may come out from behind his desk before the close and state: No you won’t. You’ll act like it did (they raised) now, and readjust on Monday, if needed.

We should know who’s now in control of the argument when it comes to positioning going forward from here. i.e., the former or the latter?

That outcome will also give a very real “tell” going forward from here on out.

© 2022 Mark St.Cyr

Note: This is not trading or investing advice of any sort. This commentary is for “big picture” discussion purposes only. Please read, or re-read the “About This Site” page for any questions or clarifications.