The Long View

It’s times like these, when the markets are near all-time highs, that Wall Street loves to trot out the idea that “You Can’t Time the Market.”  In addition, we have seen that bull markets may run for seriously long periods of time while bear markets are rather short in comparison.  But you won’t see articles or books touting “Buy for the long haul.”  at market bottoms.  Sentiment “goes with the flow.”  That is why it takes so much time and study to master the market.  This chart is not attempting to predict anything.  However, if you believe Mark Twain, “History doesn’t repeat, but it rhymes.”  Then you may understand that everything runs in Cycles.

 

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April 18, 2024

12:45 pm

SPX bumped up against the 2-hour Cycle Bottom resistance and reversed downward.  In the process it may have completed Minor Waves 1 and 2.  If so, Wave 3 may have begun, with serious repercussions.  Wave 3 may take up to 2 weeks and may have a minimum target near 4800.00.  Once beneath the prior low at 5007.00 a panic decline may develop.  Stay alert.

ZeroHedge notes, “The impulse from central-bank reserves in the US, or the change in their change on a monthly basis, points to further short-term resistance for stocks.

The Federal Reserve’s quantitative tightening program is ongoing, but bank reserves still remain almost $400 billion higher than when the Fed began QT in June 2022, even as the total size of the Fed’s balance sheet steadily contracts.”

 

8:00 am

Good Morning!

NDX futures rose to 17617.60 this morning.  Should it not be able to exceed yesterday afternoon’s high at 17630.00,, it may plunge beneath the 100-day Moving Average at 17335.83.NDX may be in a correction, but in bear markets, corrections may go deeper.  The 100-day offers yet another sell trigger that may have short-term consequences for the NDX.  The next possible support may exist near 17300.00.

This morning’s options chain shows Maximum Investor Pain at 17650.00.  Long gamma may begin at 17680.00 while short gamma may start at 17625.00.  The key to today is to rise above the heaviest short gamma beneath 17600.00.

ZeroHedge remarks, “1 – Triggers were crossed

Looks like the first CTA puke officially started yesterday. Likely that there will be more. UBS trading desk reports:

1. NQ1 sell triggers were crossed at 11:32am and 12:06pm

2. The largest futures volume spike started at 11:30am-11:45am interval at 187% of average ($18bn)

3. After 2 hours of selling, excess flow turned to small buying @ 12:45pm for both Nasdaq and S&P futures – suggests CTA selling pressure is over but next trigger is only -0.5% away”

 

 

SPX futures rose to 5045.60 this morning, but may have started a retreat from that level.  A decline beneath yesterday’s low at 5007.25 may ignite selling down to the 1987 trendline at  4950.00, where a bounce may occur.  The Cycles Model suggests a larger bounce may occur toward the weekend.

Today’s op-ex shows Max pain at 5050.00.  Long gamma may start at 5070.00 while short gamma may begin beneath 5035.00.

ZeroHedge reports, “US equity futures are higher after four consecutive days of selling, although that is the same pattern we have seen all week as futures initially rise only to dump later in the day. As of 7:40am, S&P futures are up 0.3% while tech stocks were set to outperform, pushing the Nasdaq 0.4% higher after TSMC delivered a better-than-projected revenue outlook. An index of global chip stocks and AI poster child Nvidia fell into a technical correction amid the recent selloff, with Evercore ISI analyst Julian Emanuel thinking this is only the start, with the downdraft in stocks only starting and set to continue through the rest of 2024. The dollar steadied, while US Treasuries pared an earlier gain to trade flat. In Europe, major markets are higher with Spain/France leading and Germany lagging. Commodities are mixed: oil is falling further; precious and base metals are higher. Reports from Netflix and L’Oreal are due after the close of their respective markets. Investors will also be parsing initial US jobless data, the latest Leading Index and Existing Home Sales data, as well as speakers from a raft of central banks.”

 

 

VIX futures declined to 16.83 overnight, then have resumed their climb.  It is possible that last night’s dip was sufficient to complete a 60% retracement of this week’s rally.  A breakout above the October high may be in order.

Next Wednesday’s op-ex shows Maximum Investor Pain at 16.00-17.00.  Short gamma dwells between 13.00 and 15.00.  Long gamma begins at 18.00 and stretches to 39.00.

 

TNX futures rose to 46.22 this morning, suggesting the cash market may do the same.  The Cycles Model suggests the current Master Cycle may end by this weekend.  However, ti may go out in strength, leaving the Cycle Top at 48.38 as fair game.  Of course, the linear-thinking markets may react strongly to this development, causing a stir in the equities markets.

ZeroHedge notes, “The risk of a squeeze in US funding markets is increasing as the yield curve bear steepens, i.e. longer-term yields rise more than short-term ones. More attractive bill yields and climbing interest-payment costs on government debt are depleting reserves and reducing their velocity, increasing the chance of a disorderly upswing in funding rates, as well as posing a risk to the stock market.

The bond market intimidates everybody, in the oft-cited words of Bill Clinton’s chief strategist James Carville. That description is apt today as rising yields reverberate across the financial system. Funding risks are intensifying again, increasing the chance of a rate-volatility driven correction in stocks.”

 

USD futures are consolidating after making their Master Cycle high on April 16.  The Cycles Model suggests a month-long sideways-to-lower correction before resuming its rally.

 

 

 

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April 17, 2024

2:15 pm

NDX may be due for a bounce, but overhead resistance may prevail at 17721.15.  NDX may be completing the 5th week of a 9-week decline.  The next segment may be much worse than the first.  Signals abound for the wary.

ZeroHedge remarks, “A technical sell signal for the Nasdaq has hit levels not seen since the tech bubble.

However, it should be taken in the context of a still supportive economic backdrop, with buoyant excess liquidity and low near-term recession risk.

The Hindenburg Omen compares the percentage of stocks in a stock index making new 52-week lows versus 52-week highs.

When both are rising above a certain threshold, and we are near a one-year high in the index, the signal activates.

For the Nasdaq, more omens have triggered so far this year than in any calendar year since the 2000 tech-driven top.”

 

7:50 am

Good Morning!

NDX futures have risen to a morning high of 17781.40, unable to overcome yesterday’s bounce high at 17817.73.  The 50-day Moving Average is at 17973.58.  This show of weakness suggests another decline in the making.  The next substantial support may be the 100-day Moving Average at  17320.00.

Today’s options chain shows short gamma well entrenched at 17800.00 and below.

ZeroHedge observes, “The stocks selloff is displaying features that were often seen back when shares plunged in 2022, which is a warning for equities now.

The S&P 500 has fallen for seven of the past 11 trading sessions through Monday, leaving its hit ratio — the amount of daily gains as percentage of total trading days — at 36.4%, on pace for its weakest since December 2022.”

 

SPX futures peaked at 5075.90, short of yesterday’s high.  The path of lease resistance appears to be lower, with the 1987 trendline neat 4950.00 and the 100-day Moving Average at 4921.45 as reasonable targets for the nest decline.

Today’s options chain shows Max pain at 5075.00.  Long gamma starts at 5100.00 while short gamma begins at 5050.00.

ZeroHedge reports, “US equity futures and European markets are higher, reversing several days of losses after positive earnings from some of Europe’s biggest companies lifted the mood as markets were roiled by a more hawkish outlook for interest rates. Futures on the S&P 500 rose by 0.4% reversing three days of losses that saw the S&P drop by 2.9% to close Tuesday near a two-month low. Nasdaq 100 contracts edged higher, while consumer products and services led an advance of 0.7% in the Stoxx Europe 600. Treasury yields retreated from a 2024 peak  helping small-caps outperform pre-market, and a gauge of the dollar snapped five days of gains that took it to a five-month high after Powell said it would likely take longer to have confidence that inflation is headed toward the central bank’s target. Commodities are mixed with metals stronger and oil weaker even as tensions in the Middle East persisted, while Israel weighs a response to Iran’s weekend attack. Macro data is light today with Beige Book, TIC (keep an eye on CB sales), and mortgage apps (which rose 3.3% after rising 0.1% last week).”

 

VIX futures declined to a morning low at 17.03.  The normal retracement level may be closer to 16.66.

Today is the monthly options expiration for the VIX.  Max Pain resides at 15.50.  Short gamma fills the space between 13.00 and 15.00.  Long gamma may begin at 17.00 and strengthens above 20.00.

 

TNX has pulled back from its high, but may have another day or two of strength in its rally.  The Cycle Top resistance at 48.37 may still be its target, or something very close.

 

USD futures spent the last two days testing the high at 106.44.  Today, it appears to be consolidating beneath that high, after spending 273 days in the Master Cycle.  The new Master Cycle appears to run through the month of May.  There is nonew target for this move.

 

Gold futures appear to be consolidating today, but it has developed a clear aggressive sell zone beneath 2340.00.  Should it fall beneath that level by the week-end, we may expect to see some drama in the decline.

 

 

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April 16, 2024

2:31 pm

SPX has been repelled by a lower resistance at 5066.61 and is now poised for the next decline.  The 1987 trend;ine beneath 4950 may be the next support.  A larger bounce may develop there.

ZeroHedge reports, “Update (1330ET): In his most direct comments about The Fed’s expected path for rates, Chair Powell just admitted that “recent data show lack of further progress on inflation” and the market did not like it much…”

 

 

7:30 am

Good Morning!

NDX futures dipped to a morning low at 17629.40 before bouncing.  NDX has crossed beneath the 50-day Moving Average at 17962.50, accelerating the decline.  However, it may bounce to a 2-hour resistance at 17810.00, possibly higher, before resuming its decline.

Today’s options chain shows Maximum investor Pain at 17870.00.  Long gamma makes a weak showing at 18000.00.  Short gamma begins at 17810.00.  Dealers may attempt to elevate NDX above the owrst of the short gamma.

ZeroHedge remarks, “Six stats to get you going this morning

1. The Dow closed lower for its 6th straight red day. The index is now down over 2,000 points from its recent all time high.

2. The S&P 500 closed below its 50-day moving average Monday for the first time since last November, ending the 10th longest streak since 1950.

3. The S&P 500 is only down 3.7% from its peak closing price at the end of March. The median intra-year drawdown since 1928 is -13%.

4. Monday was the first time since November 2nd that the S&P 500, Nasdaq, S&P 400 (mid-caps), and Russell 2000 (small-caps) all closed below their 50-day moving averages.

5. The volatility index VIX is now up over 50% in just 3 weeks.

6. The Real 10-Year Yield (adjusted for expected inflation) rose to 2.20%, the highest since last November. We entered the year with the real 10-year yield of 1.72%.

As scary as last Halloween

The number of stocks making 52-week lows Monday outnumbered stocks making 52-week highs by the largest margin since Halloween.”

 

SPX futures dipped to 5040.20 before bouncing.  It crossed the 50-day Moving Average at 5105.12 yesterday and may attempt a retest of the 50-day today.  Overhead resistance may be at 5100.00.  The Cycles Model indicates today may be a day of strength.  This suggests that strength may return on the downside later in the day.

Today’s options chain shows Maximum Investor Pain at 5100.00.  Long gamma may begin at 5105.00 while short gamma starts at 5100.00.

ZeroHedge reports, “S&P futures traded modestly in the green, erasing earlier losses and signaling a recovery after the S&P 500 fell more than 1% in the past two sessions, following stronger than expected earnings from index heavyweight UnitedHealth Group which soared 6% after reporting first-quarter profit that beat Wall Street’s expectations and affirmed its outlook for the year, despite the costs associated with a cyberattack on one of its subsidiaries that has roiled the health-care industry; other reporters such as Bank of America and Morgan Stanley also gained. of 8:45am, S&P futures gained 0.3%, after trading down 0.2% earlier this morning; Nasdaq futures also reversed an earlier loss and traded about 0.2% higher. Meanwhile, loans continued their ascent, with 10Y yields rising as highas 4.65% before modestly reversing, while 2-year Treasuries approached 5%. The dollar advanced for a fifth day, its longest run since January.’

 

VIX futures fell to a morning low at 17.68.  It may drop further, to its 61.8% retracement value at 16.66 while SPX bounces.  The rally may strengthen after the monthly op-ex, due tomorrow.

Tomorrow’s monthly options expiration shows Maximum Investor Pain at 15.50.  Short gamma resides between 13.00-15.00.  Long gamma may begin at 16.00 and remains strong to 60.00.

ZeroHedge observes, “SPX vs VIX

The reaction in VIX has been extreme. Last time we had a similar pick up in VIX was in Sep/Oct. The initial move higher in VIX was accompanied with a 5.5% sell off in SPX. The VIX eventually surged even higher during the autumn, and the total SPX sell off reached around 8%.”

 

USD futures may have made a Master Cycle high yesterday on day 272 of its Cycle.  USD may face a week or so of retracement, then resume its rally to the end of May.  An alternate view indicates only a smal pullback with renewed upward strength later this week.

 

TNX futures are easing back from a morning high of 46.66 (46.55 cash).  TNX is in the final week of its Master Cycle.  Its target remains at the Cycle Top at 48.33.  The Cycles tell us we are nearing an Intermediate reversal in TNX, which may involve lower rates over a three-month duration approaching 2.4%.

 

 

 

 

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April 15, 2024

10:15 am

BKX broke beneath its 50-day Moving Average at 98.19 on Friday, but recovered above temporarily.  Today it may make a permanent break beneath the 50-day, confirming its sell signal.

ZeroHedge reports, “Money-market funds saw a small outflow last week (surprisingly small given how close to Tax-Day we are), leaving them still near record highs over $6 Trillion (and the trend of increased deposits at banks has been accelerating)…

Source: Bloomberg

Interestingly, amid all the talk of tapering QT, The Fed balance sheet was basically unchanged last week (-$1.4BN)…”

 

8:40 am

Good Morning!

SPX futures have risen to 5158.90 thus far this morning.  The likely target may be Intermediate resistance at 5165.68.  The bounce is likely to be over this morning or early afternoon.  Should the SPX decline back toward the 50-deay, it may be poised for a panic decline either this afternoon or tomorrow.

Today’s options chain shows Maximum Investor pain at 5150.00.  Long gamma begins at 5165.00 while short gamma may start at 5140.00.

ZeroHedge reports, “Following the emotional rollercoaster of this weekend geopolitical “straight to DVD” soap opera, in which Iran pretended to retaliate to Israel’s embassy bombing with an attack that was meant to be a dud (and succeeded), which in turn was followed by an even more dramatic de-escalation by Israel in which after much saber rattling Netanyahu did…nothing, futures and yield are predictably higher, while oil is lower. That’s right: after digesting the weekend’s news and realizing that what just happened was one giant farce, global markets are broadly higher (except for Asia which is always a few steps behind), with European stocks ticking higher and US rebounding from Friday’s 1.5% selloff in the S&P 500. As of 7:30am, S&P futures were 0.5% higher with Nasdaq futs rising 0.6%; Treasuries slipped along with the dollar. West Texas Intermediate crude dropped below $85 a barrel, while base metals rallied with Aluminum at one point surging more than 9% after Russian supply was hit by US and UK sanctions. Gold reversed Friday’s losses to rise above $2,350 an ounce and bitcoin – which was the weekend’s only operating market and saw the initial risk-off reaction – reversed all losses and is back to unchanged. Today, the macro focus will be Retail Sales release. Feroli expects headline Retail Sales to print +0.3% vs. +0.4% survey vs. +0.6% prior. China will release key macro data at 10pm ET tonight.”

 

 

VIX futures declined to 16.60 this morning, near the 61.8% retracement value at 16.57.  The VIX Cycle may show strength through the rest of the week.  The Current Master Cycle may run into early May.

Wednesday’s monthly options chain shows Max Pain at 15.50.  Short gamma resides from 13.00 to 15.00.  Long gamma starts at 16.00 and may run up to 60.00.  The options market is on a hair trigger.

ZeroHedge observes, “VIX & MOVE have exploded

After months of a low volatility world we finally see some action in both VIX and MOVE. It is safe to say that derivatives markets are seeing more perceived risk than how actual equity markets are trading. Some even say that there is more upside to VIX from here. Our belief is that there is “catch-down” potential for equities from here, but that especially VIX probably has gone a little too far too fast.

What goes down must come up

Bond volatility has put in the biggest up move since September last year. Just when everybody agreed bond volatility was dead…

 

 

TNX has risen above 46.00 this morning as it journey’s toward the Cycle Top at 48.30.  The Cycles Model indicates that strength may persist through the week.

I have family matter to care for today.  Regular reports may resume tomorrow.

 

 

 

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April 12, 2024

3:05 pm

SPX appears to be declining through the 50-day Moving Average at 5102.22 today. There is still an opportunity for a bounce above that level.  However, a decline beneath that support may bring a waterfall event on Monday.

 

2:15 pm

Gold futures may have made their Master Cycle high this morning at 2448.75.  Since then it has fallen back to 2363.25.  This appears to be a Key Reversal, known to indicate a change in a major trend.  The blow-off top is known to to attract even the staunchest of investors, but seldom last forever.  Sell-side banks are all predicting higher gold prices.  

ZeroHedge remarks, “In investing, “Buy low, sell high” is among the most well-known sayings, and generally, it’s good advice. But with gold still holding near its historic all-time highs, central banks led by China are bucking the classic adage and smash-buying more, buying the top to fortify themselves against a global monetary and financial blow-up.

Last month marked the 17th in a row that the People’s Bank of China (PBOC) continued stacking gold. Notably, the bank typically reports lower numbers than its actual buying volume and is now also introducing a digital yuan to facilitate cross-border gold settlements.”

 

9:39 am

BKX has been on a sell signal for the past week after is crossed beneath the trendline at 100.50.  Today it sits above the 50-day Moving Average at 98.18, the final support before the dam bursts.  A bad report from a smaller bank would have been expected.  However, a miss by JPM does not set a happy tone for banks across the board.

ZeroHedge comments, “Q1 earnings season officially opened moments ago when JPM became the first mega bank to reports results, and even though JPM beat on across the board – and even unexpectedly released reserves instead of setting money aside for yet another quarter – the stock is lower by ~3% after Jamie Dimon had some gloomy words about the bank’s net interest income (which dropped in Q1) and the bank’s NII outlook for 2024 missed estimates. But before we get to all that, let’s start with the Q1 historicals which were solid across the board:”

 

9:10 am

Good Morning!

SPX futures have plummeted to a morning low of 5149.60 and threaten to go lower.  Remember that Intermediate support has been violated and SPX is on a selol signal, so this should be no surprise.  The next week should bring on an intensified decline with a possible waterfall panic.  This may be your last chance to exits longs, as the ensuing decline may be more than investors have been bargaining for.

Today’s options chain shows Maximum Investor Pain at 5200.00.  Long gamma starts at 5200.00 and intensifies at 5225.00.  Short gamma starts at 5175.00.

ZeroHedge reports, “Futures are tumbling this morning, hit by disappointing earnings and outllook from the largest US bank, JPMorgan whose stock is down around 3% in a soggy launch to Q1 earnings season, while growing fears of an imminent conflict between Israel and Iran have sent oil surging and futures sliding. As of 8:45am, S&P futures are down 0.7%, at session lows with Nasdaq also dumping after reports China has asked its telecom carriers to start phasing out foreign chips. The drop comes as we see safe having flows move capital into TSYs with bond yields sliding up to 10bps this morning. That said, the USD is higher again with the euro and cable sliding sharply. Commodities are mixed: oil and gold rally amid Middle East tension; base metals are lower amid lower-than-expected China exports (-7.5% vs. -1.9% survey vs. 5.6% prior), while the gold explosion documented last night continues, with gold futures trading just above $2,400 and spot trading just below. Today, the main focus will be banks earnings (C, JPM, WFC). We will also receive Univ. of Mich. Sentiment data.”

 

 

VIX futures have risen to a morning high at 16.28 and threatens to go much higher, as yesterday’s low began a new minor Cycle.  Particular Cyclical strength may show today and extend through the next week.

There is a battle going on in the options chain as 15.50 shows Maximum Pain for investors.  Short gamma is heavy beneath 15.00 while long gamma is gaining strength above 16.00.

 

TNX is making a slight correction as it surges toward its Cycle Top at 48.28.  Today may bring a supercharged surge of strength to yields as its nears the end of its Master Cycle.

ZeroHedge reports, “After two consecutive ugly auctions (and in the case of yesterday’s 10Y reopening, very ugly), moments ago the Treasury completed the week’s coupon issuance when, on the day when the BLS published a doctored PPI report to boost market sentiment, it sold $22 billion in 30Y paper in what was yet another ugly auction.

The high yield on today’s sale stopped at 4.671%, higher than last month’s 4.331% by 34 bps and also tailing the When Issued 4.661% by 1 basis point, the first tail for the 30Y tenor since last November.”

 

 

 

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April 11, 2024

8:00 am

Good Morning!

NDX futures have fallen to 17939.50 thus far this morning.  It has been on a confirmed sell signal since April 5 and may be poised to decline beneath its 50-day Moving Average at 17933.15 today.  Alternatively, should the 50-day Moving Average hold, NDX may bounce toward its Intermediate resistance at 18099.20, or possibly the trendline at 18500.0, since the Cycles Model pinpoints today as a day of strength.

Today’s options chain shows Maximum investor Pain at 18020.00-18125.00.  Long gamma may start at 18150.00 while short gamma is massively positioned at 18100.00.

Zerohedge reminisces, “‘Sell Mortimer, Sell!’

That is the message (our translation) from Goldman Sachs Asset Management (GSAM), who told Bloomberg today that they are taking profits from high-flying technology shares and putting the money into cheaper companies.”

 

SPX futures have dipped beneath Intermediate support at 5161.37.  Should they remain beneath that level, the next support is the 50-day Moving Average at 5092.80.  Beyond that, the 1987 trendline may be key support.  As with the NDX, today may be a day of trending strength, suggesting that, if SPX remains above Intermediate support, it may rally above 5200.00.

Today’s options chain shows Max Pain at 5175.00.  Long gamma starts at 52500.00, while short gamma may begin beneath 5150.00.

ZeroHedge reports, “Futures are weaker signaling further losses on Wall Street as stubborn inflation forces investors to reduce their expectations for Federal Reserve interest-rate cuts; tech stocks are underperforming following the significant surge in Treasuries yields which has continued today. As of 8:00am ET, S&P futures are down 0.5% and back to yesterday’s post-CPI session lows while Nasdaq futures are down 0.4%. Pre-mkt, Mag7 names are mixed, and small-caps set to underperform as yields move higher. Europe’s Stoxx 600 index also retreated, with most sectors in the red, as did Asian stocks. Treasury yields ticked higher again after the previous day’s surge, with the rate on the 10-year at 4.57%. Bonds in Europe dropped as traders trimmed their wagers on easing, with attention focused on the ECB’s policy announcement later; the USD is flat following its 1% surge yesterday, the strongest move since Mar 2023. Commodities are flattish with outperformance in base metals and crude.  Today’s macro focus is on PPI and the ECB.”

 

 

VIX futures declined to 15.50 this morning, as it must complete a retracement before moving higher.  As an example, s 61.8% retracement may take the VIX down to its 50-day Moving Average at 14.06

Next Wednesday’s options chain shows Max Pain at 15.50.00.  Short gamma resides beneath 15.00 while long gamma starts at 16.00.

 

TNX futures declined from its high at 46.04 to a morning low at 45.19.The Cycles Model informs us that three of the six indicators of strength may be firing during the next week, suggesting that the Cycle Top may be within reach for the current Master Cycle.

ZeroHedge remarks, “The fourth hotter-than-expected core inflation report in a row got investors reevaluating expectations around the Fed’s first rate cut

Source: Bloomberg

Goldman’s Diana Asatryan noted that their Research group pushed its first rate cut forecast to July from June, expecting two cuts this year.

The market is now pricing in just 38bps (1.5 rate-cuts) in 2024…”

 

 

 

 

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April 10, 2024

7:45 am

Good Morning!

NDX futures have not sold off, suggesting a possible attempt at a new high near the Cycle Top at 18738.62.  Today is day 258 in the Cycles Model, an appropriate day for a reversal.  So, one of two things may happen.  Worst case first (for hedge funds who have been shorting), the NDX may make a run for a new all-time high above 18464.70.  What follows may be a Key Reversal in the next 24-48 hours.  That would move the March 21 top to the present.

The second action would be to break the trendline near 18000.00, immediately plunging stocks into a month-long decline.  The markets have taken the second option.

ZeroHedge observes, “Momentum wobble

The Momentum Factor sold off -3.7% yesterday, its worst pullback YTD. The bigger question here is of course if a wobble in the best performing theme of the year will have ripple effects into the overall market (ie, create a sell-off). We would say that if it continues for 1-2 more days it for sure will.

Source: Bloomberg

Biggest movers yesterday

Here is what drove the basket lower yesterday (by weight):

1. The best shall become the worst: NVDA -69%, LLY -25%, MA -8%, META -8%

2. The worst shall become the best: AAPL +28%, MSFT +20%, TSLA +17%”

 

SPX futures are near the breakout point at 8224.81.  Should SPX break out it may probe towards its Cycle Top at 5282.46.  Should a decline take place beneath the trendline at 5165.00, the decline may proceed as mentioned in the NDX.  Al await the CPI report for guidance.

Today’s options trading has become very crowded around 5200.00.  Long gamma may start at 5225.00 while short gamma may begin at 5190.00.

 

VIX futures traded down to 14.75 this morning as it awaits the CPI report.  The mid-Cycle support is at 14.74, where normal retracement usuaaally end.

 

 

 

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April 9, 2024

8:00 am

Good Morning!

SPX futures are being pressed into an ever-smaller formation, appearing to be flat, but in fact, revealing a Triangle Wave B.  Today’s Cycles Model suggests a brief spike to 5220.00-5225.00 before a strong reversal.  SPX is on a sell signal.

Today’s options chain reveals Maximum Investor Pain at 5205.00.  Long gamma may begin at 5225.00 while short gajmma lurks beneath 5200.00.

ZeroHedge reports, “US equity futures are trading in a narrow range, swinging between gains and losses as bonds climbed, clawing back some of Monday’s slump which sent yields to the highest since last November in the buildup to US CPI print tomorrow that is crucial to the Fed’s decision when it will start to cut interest rates; Government debt in the UK and Germany followed suit, with yields falling across the curve after a 20-year UK bond sale drew record demand from investors. As of 8:00am, S&P futures were up 0.1% but traded tightly around the unchanged line as they extended Monday’s flat close on Wall Street, when trading was the thinnest since Christmas. Nasdaq futures gained 0.2% while Europe’s Estoxx 50 was down about 0.5%, with technology and industrials leading to the downside. Commodity markets are higher lead by Energy and Metals, with Gold hitting a new record high, rising as much as $25 to $2,365 before paring gains. The macro picture is light today but keep an eye on the 3Y auction, which may give some cues to investor positioning ahead of the CPI.”

 

 

VIX futures rose to 15.51 this morning, even as the SPX futures probe higher.  There is a possibility of the VIX declining to the mid-Cycle support at 14.73 today.  It may be looked upon as a buying/hedging opportunity.

Wednesday’s options chain reveals Max Pain near 15.00  Short gamma resides at 14.00 while long gamma begins at 17.00 and remains strong to 25.00.

 

TNX futures have been easing lower to 43.79 after Monday’s spike high.  It appears that Stock Charts may have a data feed issue since the charts have not been updated since Friday.  Today’s Treasury Auction shows  $65 billion in 42-day bills and $58 billion of 3-year notes.  Tomorrow shows $39 billion of the 9-year 10-month notes being offered.

 

USD futures are sagging down to 103..73 thus far.  Both Intermediate support at the 50-day Moving Average are at 103.70.  It would do well to see if these supports hold.

 

Gold futures rose to an overnight high of 2384.35 on day 253 of the Master Cycle.  The odds of a reversal by the end of the week are high.  cAUTION IS ADVISED.

ZeroHedge remarks, “April 8th: Bullion Bank (Citi) raises short term price targets for Gold and Silver 9% and 16% respectively, increasing price targets to $2400 and $28 over the next 3 months. with topside price spikes of $3,000 and $32.00 this year now on the table.”

 

 

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April 8, 2024

8 :15 am

Good Morning!

NDX futures have been consolidating inside Friday’s trading range over the weekend thus far.  There appears to be an attempt to hold the trendline at 18100.00 with a backup support at the intermediate level at 18053.00.  The Cycles Model shows today as a day of strength.  Should NDX remain above its Intermediate support, we may see an attempt to bounce above Friday’s high at 18202.96.  However, a reversal beneath Intermediate support may produce a waterfall event.

Today’s options chain shows Maximum Investor Pain at 18100.00.  Long gamma may begin immediately above that level, while short gamma emerges beneath 18050.00.

ZeroHedge observes, “Best of times

Buybacks + inflows have stepped up and created a very supportive flow dynamic. It has been the best of times and extreme from a historical standpoint (if you disregard the post-COVID bump).

Source: Deutsche

 

We are running out of equities

Global equity supply the most negative it has been since 1999. Year to date, global public equity supply has declined by $120 billion. This is three times higher than the $40 billion decline that occurred in 2023. We are also on track for a third straight year of declines for the first time in history.”

 

SPX futures are consolidating around 5200.00 this morning.  The Diagonal trendline provides overhead resistance near 5225.00.  In the meantime, Intermediate support comes in at 5143.43, where the sell signal is confirmed.  The Cycles Model indicates a show of strength may be at hand.  That indicates the trendline (5225.00-5235.00)may be tested again.  A breakdown at the trendline may produce a waterfall event.

Today’s op-ex shows Max Pain at 5205.00.  Long gamma starts at 5220.00 while short gamma begins abruptly beneath 5200.00.

ZeroHedge reports, “US equity futures are flat, trading around 5,252, having rebounded from session lows even as 10Y yields extend their ascent and the USD strengthens as traders further pare expectations for interest-rate cuts in the face of resilient readings on the US economy. As of 8:00am, S&P and Nasdaq fuitures are both unchnaged while major European markets are mostly higher with only Spain/UK in the red. Treasury yields rose to their highest levels of the year across the curve, with the 10-year climbing above 4.45%. Interest-rate swaps imply around 60 basis points of US monetary easing this year, making two cuts the most likely outcome. On Friday, the chance of a third cut was still above 50%. European bond yields are also higher, but yield curves are not moving in tandem. Commodities are mixed with Energy lower, Metals higher, and Ags mixed. Crude oil turned lower after last week’s strong gains after Israel said it will pull some troops from Gaza. Brent futures briefly dropped below $90-handle before reversing losses. Gold also reversed early losses and printed a fresh record above $2,350 before paring gains. Looking at the calendar, Mon/Tues are light macro days ahead of Wednesday’s CPI print, Thurs’ ECB mtg, and Fri’s Bank earnings which launch Q1 earnings season; we algo get at least 7x Fedspeakers where investors will see if a hawkish pivot is building if CPI prints hotter than expected. While the market is trimming rate hike estimates both Goldman and JPM still see at least 3x rate cuts.”

 

VIX futures rose to 16.49 as tensions arise.  The elevated VIX over the weekend shows that trending strength has been in play and may make a greater showing in the cash market this week.

Wednesday’s op-ex shows Max pain at 15.00.  There is a small contingent of short gamma at 14.00.  Long gamma starts at 17.00 and builds to 25.00.

 

TNX futures have risen to 44.67 this morning before moderating a bit.  The data feed to Stock Charts does not appear to be working, so I will replace the current chart with a new one as it becomes available.  The Cycles Model suggests another two weeks of rising yields, indicating a possible rally to the Cycle Top resistance at 48.28.

ZeroHedge remarks, “Survey data shows that outright shorts in US Treasuries are near lows. But investors are missing a trick as inflation risks point to higher bond volatility and yields.

JP Morgan’s Treasury Survey tracks their clients’ positioning in Treasuries, asking them whether they are long, neutral or short. The net of the positions is close to flat, but outright shorts are unusually low, with the number of clients saying they are positioned that way near the nadir for the 20-year history of the survey.

 

 

 

 

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April 5, 2024

9:52 am

Good Morning!

Yesterday was noteworthy in the fact that the Cycle Top, at 5264.65, formerly support for the past two months, became resistance in the SPX.  Once that was tested, SPX declined sharply to Intermediate support at 5140.62, where it bounced.  SPX may now test the trendline near 5200.00, although it may reverse short of that target.  The next level of support is the 50-day Moving Average, at 5074.05.  Beneath that lies the 1987 trendline and the 100-day Moving Average, at 4875.02.  The Cycles Model suggests a possible month of decline ahead.  Trending strength may switch to the downside early next week.

Today’s options chain shows Max Pain at a very crowded 5200 for both puts and calls.  While clls occupy a small majority above that level, puts now dominate the options chain beneath 5200.00.

ZeroHedge reports, “US futures rebounded from yesterday’s late day rout even as European stocks slumped the most in almost two months and Asian markets tumbled the most in a month, tracking Thursday’s broad market retreat as oil prices held near five-month highs above $90 and investors braced for today’s jobs report where the whisper is of a hotter than expected print. As of 7:30am, S&P futures rose 0.3% after tumbling 1.4% yesterday; even with the modest gain the index is on track for its biggest weekly decline since mid-February.  Europe’s Stoxx 600 slid more than 1%, following the previous session’s sharp retreat on Wall Street and losses in Asia earlier on Friday. US and euro-area bond yields inched higher as fears of an escalation in the Middle Eastern conflict kept Brent crude futures near $91 a barrel, fanning inflation concerns. The USD is stronger, bitcoin has resumed selling, commodities are higher led by Energy products and base metals. From a macro perspective, NFP is the focus, survey is +214k survey vs. BBG whisper +230k; both are down from the +275k prior.

 

 

VIX is consolidating near the upper end of yesterday’s trading range.  The Cycles Model suggests that a burst of trending strength may be imminent.  The February high is likely to be overcome.

Wednesday’s op-ex shows Maximum Investor Pain at 14.00.  Negative gamma beneath that level is scarce, while positive gamma is building near the October high.

ZeroHedge observes, “What started to be a rather stable and uneventful session, ended in some turbulence after a sharp reversal lower triggered by Middle East geopolitical headlines (a spike in oil) and hawkish fed speak.

All sectors finished in the red, with 430 S&P names finished lower (NVDA, GOOG/L, AMD, and AMZN contributed to 30% of move lower). Momentum, AI & New Technology, and Retail Favorites were among the hardest hit all down -2%. NDX broke through its 50dma (17,903…keep an eye on 100dma = 17,134).”

 

TNX may be consolidating, although at a higher level today.  The Cycles Model suggfests trending strength building over the next two weeks.  The Cycle Top at 48.28 appears to be an appropriate target.

 

BKX is pressing down on its 4.5-month trendline at 100.00 this morning.  Loss of upward support will be critical and lead to a confirmed sell signal.  This is also a clear sign that liquidity is drying up.

 

 

 

 

 

 

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