Yields Drop On Treasury TGA Buyback Dialogue As Dollar Bounces

Hello everybody. Welcome to Trading the
Close. My name is Drew Dossett, and
guys, welcome back to the markets this
week. Over the weekend and through into
today, we had some dialogue around what
the Fed is doing regarding these
buybacks of long-dated bonds, guys. And
so, what they're doing, they're opening
up their pockets a little bit more,
dipping into their TGA fund, which is,
guys, it's the Treasury General Account,
and they're actually going to be using
those funds to buy back some of the
debt. So, that's what at least they've
discussed. They haven't said how much
they're going to buy back. They did say
this is going to roll through November
9th, but at least in the current state,
as of today, the 10-year yield came
down, allowing investors to start piling
back into certain equities. Tech was
still under pressure. The Dow Jones
actually stayed positive, um but at
least that simmered some investors for
now. I think that this, guys, this is
something I'll jump into with the
dollar. Let's get into some charts
first. First up with the S&P 500, guys.
You see here with the S&P 500, we've got
a beautiful culmination of about six
trading days, all developing motion,
moving price action down here on the S&P
500. I've highlighted this before, guys.
This pivot point, which is the previous
all-time high, that's the candle that we
broke out to get above in this most
recent rally. I've been waiting for
price to come back and test that level.
After all, how many times in this show
do I talk about a breakout and a retrace
bounce play. Now, this bounce is what
I'm anticipating to occur should and
when price come down to $760.40.
The thing that will will dampen the
bounce, make it smaller is a couple
things. First, we already got down here
last week on Thursday, put up a small
bounce right before the level, and
secondly, the backdrop of what I
described, the Fed is reducing our
dollar buying power by doing these
buybacks, maintaining the Treasury
yield. So, they're artificially doing
this, guys. This is a currency
debasement play. How much of this is
going to be remain elevated, and how
much are investors going to be eager to
jump right back into the markets with
all of this going on in the backdrop? I
know I'm not as eager, so I'm
anticipating a smaller bounce should and
when price hit there potentially
tomorrow at $760.40.
Now, if we didn't have this in the
backdrop, I would anticipate a potential
bounce much higher on the charts, but it
is where we're at right now, so we've
got to analyze where price can currently
go. And up next on the Nasdaq 100 with
the QQQ, you can see price action
putting in today on a daily candle a
close underneath this big green candle
here on August 4th, so that's one candle
unwinding a lot of that price action.
Two candles with a closing beneath
today's low would increase probabilities
of us coming down here and tagging this
horizontal support trend line. Now, of
course, we're going to be very close at
that point, but we keep on increasing
probabilities with this movement that
we're seeing coming down for the Qs.
This is where I anticipate a near-term
bounce at $695.25
on the QQQ. Next up, the SMH also
declined. Now, this one heavier than the
other indices that we've covered so far.
You can see down 2.43%
on the SMH today. Nice decline, but look
what happened, and I did highlight this
last week, guys. I've been drilling at
home with the SMH saying, "Guys, the
longer-term patterns, as well as the
semis, are leading indicators, so pay
attention to both in the semis. Our
long-term inclining parallel that we've
got displayed on our chart, and then
plus this is a leading indicator for
bullish activity, but we're getting
close to another bounce level on certain
memory plays. Something that we're going
to cover a little bit later in the show.
First off, let's look at this SMH
dropping down back into this parallel
channel. For any viewers who have not
seen this or to remind the ones that
have, this parallel began back here at
the liberation day lows back in April of
2025. You can see with this fall that we
had here in July of this year, we
actually pierced got inside of it, but
only four or five trading days and we
quickly bounced to get right back above.
So, the big news story of the day today
is right here on this chart with the SMH
getting back within that parallel
channel. Next support, should the
selling presume in into tomorrow resume
into tomorrow, it's going to be at
$526.10
on the chart. Very nice entry back into
this parallel, one that could be hard to
confirm without coming down and tagging
support. Confirming it would be a daily
close under today's low at $546.75.
So, I'm going to be watching the SMH
very, very closely tomorrow. Now, where
we did have some inflow of capital was
into the Dow Jones and more defensive
plays, guys. You can see here Dow Jones
Industrial DJ DJI up 0.26%.
Not entirely robust, but a completely
different story than what we saw on the
SMH. Now, to look at the Dow Jones
longer term inclining parallel is really
the focus of where price action has been
contained since the liberation day lows.
Very much like the SMH narrow inclining
parallel, except for this DJI, price is
still all within it. Now, if you notice,
we had a daily topping tail up here on
August 5th implying we were about to
come down. And where did we come down
to? Guys, you can draw these trend lines
just as easily on your chart. I have a
trend line back here from January 31st
of '25 drawn over to the pivot high on
February of 2026. That's where price
action got back above today. Very nicely
done and you can see on Friday basically
closed right on that inclining trend
line. If you want to rewind time back to
see where price got a bounce from, well,
it comes from this trend line, guys. If
you draw it from pivot to pivot, and
that's all contained easily in this year
on the DJI, and that clearly gave you
the spot in which price has bounced
from. Very nice clean third hit from
that as well on the DJI. So, if you're a
bull here on DJI, you want to see price
again tomorrow push above this inclining
trend line, get a close above today's
highs. That way this inclining trend
line will be support at 53,374
points. Next up, briefly into the US
dollar Canadian dollar because we also
had some news over the weekend in which
the US is going to implement 50% tariffs
on Canada. And Canada has vowed to
respond dollar for dollar, but it will
take about a week or so or 2 weeks for
them to initiate that sort of response.
Noticing though on the US dollar
Canadian dollar, look at the rip that's
occurred here with the Canadian dollar
slipping with these new tariffs being
put on place and the US dollar bouncing
up, gaining traction today, by the way.
Very nice bounce here on this chart.
Should take us up if this momentum
continues to 1.39
on the chart of the USD CAD to display
that US dollar strength. Flipping over
into the DXY and the dollar, you can see
here price action got back into the top
50% of the parallel. Now, this is only
one day doing so, but still it is a move
up. Regardless, it is still this whole
move that's happening, as I said, what
the Fed is planning to do. And you can
see here clearly with this big red
candle that occurred last week when
percent did announce that they are
buying back these bonds. Guys, this is
devaluing our own dollar. We didn't have
to do anything and then we lost buying
power from this. I know the markets, and
I love to have markets at all-time
highs, and you better believe that
coming into midterms so do politicians,
but it's at the expense of our dollars
with them doing this. So, that is
something that I don't necessarily
appreciate. I know they're trying to
backstop, trying to help out these
yields from going too high too fast
because that will certainly put some
hurting on the markets, but guys it's at
our expense in this situation. So, how
long will this go on with the current
environment without yields rising is
something that likely is going to be
answered with more data prints coming
out. CPE data by the way is coming up
Wednesday morning and then we have Warsh
that is due to have a speech at the
symposium in Montana this Friday
morning. So, guys
big stuff coming up on the horizon, but
what's going on behind the scenes isn't
helping our case out with the dollar,
which is why folks are clamoring towards
gold and silver. They're seeing this as
a play of artificially decreasing the
yield, guys. And so, what people are
doing are they're recognizing the fact
it's devaluing our dollar. I don't want
them to do that without any say. So,
folks are running and clamoring towards
silver, gold, as well as Bitcoin. How
long will all of that last is the major
question as Jerome or pardon me, Warsh
did say and Bostic said they would be
making these purchases through November
9th. We'll see if that ends up being the
cutoff date for the yield hold, which
does make sense because that's also the
term right into midterms. Anyway, back
into the charts, guys. Off of my soapbox
I go. We see here with the 10-year yield
it did pull down slightly today with
that news, but it's still within the
last trading candle on Friday. Elevated
and remaining above 4.687.
Next stop, should we keep marching up on
the charts, 4.809%.
Next up into gold. Gold also did have a
little bit of a pullback today off of
the tops, but you can see towards the
end of the day, guys, at 2:30 p.m. Just
right back up on the charts, putting in
bullish consolidation here on the
10-minute chart. Nice V-shape recovery
for this day as well. Looking like gold
is about to go back and test the high
range on this chart. So, where does gold
go next? A clean sweep through this
resistance that targets the next area of
resistance at $4.70.
Now, back into the 10-minute chart just
so briefly here, guys. Let me throw off
this volume. I did want to illustrate
though in the most recent march up, gold
has been held down by this inclining
trend line found on the 10-minute chart.
If you pull this up on your own chart,
you'll follow this too and will likely
find resistance tomorrow if price pushes
up into this trend line. You can draw
this back on August 19th, 6:10 Eastern
time. Draw that as your first initial
pivot point and connect it over to the
pivot highs on August 21st at 1:00 p.m.
And then draw that out. You can even see
how the first candle, once the US
markets open here at 9:30 a.m. Eastern,
registered a 10-minute topping tail and
that was the high of the day. But, as
I've said, price action has looked like
it's fighting to get back up higher on
the charts and march up to
the all-time highs of the day today. All
right? So, beyond that, next resistance
tomorrow could likely be in the $4,700
range on the 10-minute chart. Next up
into silver, somewhat took a day off and
that's quite all right. You can see here
it did secure itself above this
resistance level. In essence, closing on
it over on Thursday and then on Friday
pushing up above. So, that leaves this
near-term resistance at 67.99 has
flipped into support. Next resistance up
on the chart at 72.07.
Moving into oil, now oil did slide
allowing allowing some stocks to go
ahead and bounce up on the day. A little
bit of pressure away from inflation with
this decline in US oil. That still
doesn't change the fact US oil has
broken out of a declining trend line.
Near term target will be $96 and $0.44.
What generally happens with the
breakout, folks? You've seen it and
heard it enough. We like to breakout,
retrace, and then bounce up on the
chart. So, I think that's what's trying
to go on here on the chart of US oil.
Even with the backdrop of the Middle
East sanctions, uh escalation, you name
it. Next up into Nat Gas. Put in a
valiant effort once again today, much
like it did last Wednesday with a
monstrous daily candle wick trying to
push above and tag this resistance line
at $2.90.
Most importantly, where is price
closing? In bullish consolidation. So,
we've had two failed attempts to
breakout and one failed breakdown
attempt. That still puts us right back
in bullish consolidation near term. I'm
still anticipating price to get up and
actually put in some more physical
touches of this resistance line at $2.90
in the near future. Uh into Bitcoin we
go, guys. Bitcoin continued its march.
You see it chilled out, hung out over
the weekend a little bit, but continued
pushing up today making new near term
highs uh from the rally that occurred
this last Friday. Most importantly,
guys, look what's happened. This is an
inverse head and shoulders pattern that
is already completed the measured move.
So, right now, price action is digesting
that measured move. As long as price
remains over this mark, that actually
bodes very well for Bitcoin to continue
marching up to the next resistance.
Clearly, it will be right here at this
pivot top range right around $82,500,
but the major level that I am watching,
guys, is this inclining trend line that
you see here on the chart. This trend
line is the neckline for the larger head
and shoulders pattern on the chart of
Bitcoin. If we do get Bitcoin's price
back up above you could say goodbye to
this measured move
or target down here sub $40,000. And
then plus also, you could say goodbye to
the low occurring here in October with
our cyclical analysis because I I think
I let everybody know that I did or that
I could on our show and too many people
know and too many people are pulling the
trigger buying getting into Bitcoin
right now. But then again, look at the
macro backdrop. Everything I just
described with the potential of the US
dollar getting devalued and people want
to maintain their value with their
currency. So where do they spread their
money? Gold, silver, Bitcoin. Makes
sense why Bitcoin's getting a push. Plus
in addition in the backdrop, you got the
Clarity Act with the potential to pass
in September. Now Polymarket has it
about 20 to 30% chance to pass by
December of this year, but I'm leaning
that that Clarity Act will get passed
before the midterms come. I may be
wrong, but that's where I see that
happening and if that does occur, there
will be another light, another ignition
into the crypto space likely sending us
up above this key trend line, the one
that I'm highlighting right here on the
chart at 88,000, roughly 800 to 900
dollars. Uh next up guys, some moves on
the charts. Expedia pushing up nicely
today up 5.44%
but if you want to jump on with this
ride, I wouldn't recommend doing so
right now. After all, look down here at
the daily RSI. We have been in and above
70, which is the threshold of describing
an overbought stock in the near term.
We've been jockeying around that for the
past couple weeks of trading implying we
were just moved too high too fast on the
Expedia chart. Plus when you look at it
with technical analysis, I see the top
end range of the parallel channel very,
very close. So if you're in Expedia,
this is where I would be getting out
just under 350 dollars. As you can see
by Monday, August 31st, that value at
the top of the parallel is 348 dollars
and 52 cents. Next up, another chart
getting extended near term to the
upside. Chart, nice day today up 3.91%
following up these missed earnings with
a nice accelerated push up on the chart
for Cart. Now, what I love to do, guys,
with my charts, I keep old analysis on
the chart to help give me insight if and
when price comes back up to it. Very
much like what you see here with this
blue parallel channel that contained
price back here in February of 2024 all
up until price broke down from that
parallel in September of last year. What
did it do when it broke down, guys? It
broke down, caught support, and retraced
to that trendline. Guys, again, we go
over this over and over and over. It's
for your own good so you don't get
whipped out of a trade in this scenario.
Play it smooth, play it calm, buy the
support, wait for the return to the
bottom of the parallel. Now, it looks
like Cart is wanting to make a sequel to
this and return to the bottom of the
parallel once again, guys. That level,
as you can see, would clear the previous
all-time high pivots right here on Cart
and would then establish a new all-time
high roughly about $56.80.
That's unless, of course, we do it
within the next day or two, which would
then hit us at all-time highs and then
have a smaller value here at once at the
bottom of that parallel at 55.32.
Regardless, guys, the parallel and
all-time highs are telling me resistance
ahead likely due for profit takers to
step up, push price back down to these
previous pivot highs around $49. Next
up, on the opposite end of the spectrum,
guys, look what we have here with STX. A
breakout and a full retrace tagging that
level today, guys. That should spell a
bounce tomorrow. That should put us up
here giving us a chance to retest this
$921
level in the near future. The one thing
that's making me a little hesitant about
it. Notice how price has gotten down
underneath this other inclining
trendline. Yes, it's only one day, but
then also this area in which should have
provided a bounce created a near-term
bear flag and the drop. So, this one is
not as on sturdy ground as what I would
anticipate, mainly because again, the
backdrop with artificially devaluing our
dollar is going on. So, how many more
rocket rallies can we have in these
memories uh chips without some further
selling pressure? But, I will say one
thing, that is a buying opportunity,
something that should yield a move at
least back over this inclining trend
line, likely even tomorrow around $831
with a near-term target, as I said,
attacking this trend line right under
$915.
Now, if this does this trend line fails,
the next level of support will be at
these low pivot ranges at 702. So, just
be mindful, go into it thinking it can
fail, that way you can add to the
position, keep your uh mind and emotions
in check for when price does eventually
retrace this trend line and this trend
line, you're comfortably in the money
and banking profits. Next up, another
stock getting near to some buy levels,
something that I would be considering in
is WDC.
Look at this on WDC, we've got price
action hitting another long-term trend
line, one of which, much like on STX,
hit recently, bounced up, came back
down, and retested this area. So, we
very well could see a bounce again as
early as tomorrow pushing us for this
near-term destination at $550, but I
have another backup level, as I always
do, whenever I'm interested in going
long. I got to make sure I've got
another level in case this level that
I'm targeting does get pierced. And you
can see this other secondary level comes
from the low in November of 2025,
connected over to the pivot in March of
this year, and you can see that level is
going to come right under $400, right
around $390.
Should we have a continued sell through
that trend line, I would almost there's
a high probability chance, there's no
guarantees in stocks, but a high
probability chance with the convergence
of both this declining trend line and
this inclining trend line will create a
spider web bounce like effect for more
um
more conservative route to wait for a
trade. Wait for the fall to come down
here sub 400 should generate at least a
minimum 10% pop up to this other
inclining trend line on the chart.
All right, guys. That wraps up today's
trade in the close. Uh sorry I didn't
get to a couple viewer requests. I'll
make sure to get to those this week.
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