Hi everyone,
We’ve added a new Liquidity Conditions indicator to the TMAD app! It gives us another way to assess the market environment and understand why price moves can become so sharp.
Liquidity is important because when it’s thin, there may be less buying and selling available to absorb orders. That can amplify moves in both directions, creating violent selloffs but also powerful bounces. A big green day doesn’t necessarily mean the market is out of danger.
As you can see, the indicator currently shows “Tight” but “Improving.” The recent uptick is encouraging, but conditions are still well below the more supportive levels we saw earlier this year. That’s why we’re continuing to watch our position sizes and being selective rather than chasing every bounce.
The indicator updates daily and combines several market signals, to help us assess liquidity conditions and financial stress. It’s not a standalone buy-or-sell signal, but it adds valuable context alongside the trend and price action.
You can find it under the News tab in the TMAD app. Alessio explains how it works and what it can tell us about volatility in this short video here:
Sector Rotations
We’ve also added Sector Rotation to the app, so you can see how different sectors have performed over the past month and click on each one to view its chart.
As Alessio explains, when money moves into defensive sectors such as consumer staples and healthcare, it can signal a more cautious market. A shift back toward higher-volatility sectors may suggest investors are becoming more comfortable taking risk. It’s another useful way to see where market leadership is moving.
Let’s take a closer look at what’s happening in the realm of commodities and market levels we’re watching.
Commodities
This latest inflation report is a real problem because it shows that price spikes aren't just about energy anymore as core prices came in hotter than expected too.
Even though interest rates are high, the cost of housing and rent hasn't cooled down; instead, high rates have made it harder for people to move or buy, keeping shelter costs painfully high.
Combined with rising electricity bills, everyday Americans are getting squeezed on their basic living expenses, leaving the Fed with almost no room to lower rates.
The 3M T-bills yield is already reflecting the likehood of a rate hike for December as rate continues to rise.
Positioning Update
GLD 0.00%↑ GOLD ETF
