Doh!!! Tomorrow is another Treasury auction and to prepare our fearless Fed is buying while our Treasury is selling. How does that work? Two separate sets of books. The former injects reserves into the system by buying Treasury debt and counts it as an (cough) asset. While the latter sells debt which is a responsibility of the taxpayer. It’s that credit/debit deal. Make sense to you? Tony Soprano knows how this works since he cooked the books and got the vig.

Volume remains light and breadth negative to neutral.





The first two charts indicate different time views. The daily NYMO reflects only ultra-short term conditions. In that view we see markets as much oversold. But the intermediate to longer term Summation Index shows a much overbought market rolling over. The latter is a more impressive condition and warning flags are being posted.



































































































































Tomorrow’s Treasury auctions will be closely watched. Clearly the government activities are confusing average investors since Money & Banking is a boring and confusing topic. Most people just know there’s a Federal Reserve Board but don’t really understand why it exists or what it does. Even experts that study its activities get confused. Having a central bank with strong (and proposed strengthened) powers has been praised and derided throughout history.

“ If the American People allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the People of all their Property until their Children will wake up homeless on the continent their Fathers conquered.” Thomas Jefferson.

The Summation Index is rolling over, volume remains weak, there isn’t a catalyst in view to drive markets higher and etc. Therefore markets will fade as they’re now doing. The Treasury auctions tomorrow coupled with quad witching on Friday should provide entertainment if nothing else.

Let’s see what happens.