When Will US Debt Become a Problem?
Expect trading volumes to dip today
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Our View
The ES is on a tear to the upside and is doing the same thing it’s been doing since its October low: Make a new high, pullback, followed by some back-and-fill, and then rally to new highs.
I get it, the Fed has supplied so much liquidity with all the trillions it has printed over the years that now the ES barely pulls back. Every piece of bad news is bought — it doesn’t matter if it’s Putin threatening nuclear armageddon, millions of immigrants crossing our border, tighter credit, inflation and volatile politics or mounting fiscal burden.
The question is, how long can this go on?
The debt load of the US is growing at an astounding pace — higher rates aren’t helping — and in recent months, it has increased to about $1 trillion every 100 days. I could take some of this information off various posts on the internet, but you can read it yourself. If it stays like that and doesn’t increase over the next 10 years, it would equal $36.5 trillion.
This is unsustainable — especially when you look at the current debt of $34.4 trillion — and if you look at the deficit tracker you can see how this will blow up at some point.
I know… I’m always pessimistic but who isn’t?
Our Lean
March is historically strong early in the month.
That said, this week’s economic calendar starts out slow with Philadelphia Fed President Tom Harker speaking today and then kicks into gear on Super Tuesday. In total, there are 10 economic reports — featuring ADP, JOLTs and Jobs Friday — 6 Fed Governors speaking and Fed Chair Jerome Powell testifying to Congress on Wednesday and Thursday.
Our Lean: Sell the early rallies and buy the pullbacks. I expect volume to drop today.
MrTopStep Levels
MiM and Daily Recap
XX
The ES rallied up to 5116.25, sold off down to 5089.25 at 5:31 am, rallied back up to 5106.25 at 8:23 am, and opened Friday’s regular session at 5105.75 on volume of 257k contracts.
After the open, the ES shot up to 5111.75, pulled back to the 5101.25 area at 9:56, and then went straight up to 5119.00 at 10:00 after disappointing ISM and consumer confidence numbers. From there, the ES sold off down to 5107.75 and back-and-filled in a 4 pt range, dropped down to 5102.25 at 10:05 and rallied back up to a new high at 5121.00 at 10:30.
The ES did what it did all day: had a small pullback and then rallied up to 5121.00 and then made 12 separate new highs up to 5149.25 at 2:31. From there, it pulled back to the 5139.50 level and then rallied back up to 5147.75 at 3:48 and traded 5145.75 as the 3:50 cash imbalance showed $2.2 billion for sale and traded 5145.50 on the 4:00 cash close. After 4:00, the NQ started down-ticking and the ES sold off down to 5141.00 at 4:09 before setting at 5138.75 on the 5:00 futures close, up 35 points or +0.69%, while the NQ settled at 18,321, up +1.32% on the day.
In the end, it was a buy-the-pullback kind of day. In terms of the ES’s overall tone, the markets were firm. In terms of the ES’s overall trade, volume was steady all day: 312k ES traded on Globex and 1.205 million traded on the day session for a total of 1.517 million contracts traded.
Economic Calendar
Disclaimer: Charts and analysis are for discussion and education purposes only. I am not a financial advisor, do not give financial advice and am not recommending the buying or selling of any security.
Remember: Not all setups will trigger. Not all setups will be profitable. Not all setups should be taken. These are simply the setups that I have put together for years on my own and what I watch as part of my own “game plan” coming into each day. Good luck!
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