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Treasury Throws a Wrench Into QE-Infinity


Last minute Treasury auction could create a liquidity issue.


Especially given recent word of today's Treasury auction, I can't overemphasize the need for caution here, and the chart below outlines the "conservative" bear case if support fails.

Click to enlarge

The SPX short-term chart is hinting at lower prices still to come. I've parsed the information as best I can, though the chart will probably still be confusing to those not well-versed in Elliott Wave Theory. To make it as simple as possible, I've diagrammed the near-term path that would be most confusing to try and explain. I've also outlined some key levels. Barring a failed fifth wave at yesterday's low, the chart suggests lower prices one way or another.

The running triangle count (option 3 on the chart and not shown) would see a small bounce early tomorrow and then a reversal to new lows.

Click to enlarge
No positions in stocks mentioned.
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