Margin Debt and stop orders
Chaos continues in the halls of Congress as the House remains without a speaker. There is still a lot of time to see how this plays out. Remember, the government passed a funding bill to get them to November 18th. After that, real pressure could be exerted on the GOP holdouts. Unfortunately the GOP is already busy whittling down their advantage by suggesting empowering the acting speaker, Patrick McHenry.
Meanwhile both Biden and Yellen believe that the US can afford to fight two wars at once and are begging/demanding funding.
Sounds like a great way to throw good money after bad.
Looking at trader sentiment using margin debt. It looks like it has largely flat-lined.
but cash on the sidelines has left for greener pastures.
$23.7B ran out of the free credit balance month-over-month.
A reader commented that money market funds are a big source of the RRP facility usage and that with the short end of the yield curve paying 5%+, the herd is moving to treasury bills and notes over bonds.
Now I believe we are seeing the free credit balances of traders doing the same.
In addition, lending has softened.
Banks are paying interest on deposits so that they don’t have to borrow in this environment. You can, once again, get paid to be a saver.
We are quickly shifting down John Exter’s pyramid.
It feels like the tide is going out. I’ve made some substantial gains on some of my holdings and don’t want to watch it wash away with the tide. I sold all my option contracts and setup the following stop losses: