April 29, 2021

1:20 pm

According to Nomura, a “Crash Up” is possible.  Investors are buying hedges and may be subjecting themselves to a potential short squeeze.  I disagree for two reasons.  First, look at the Industrials.  It made a high of  34032.83 against the April 16 high of 34256.80.  The largest investors invest in the DJIA for liquidity and size.  This does not compute with the new highs in the SPX and NDX, telling us that smart/institutional money may be leaving.  Second, the inability of the SPX to remain above 4200.00 and the NDX to stay above 14000.00 tells us that demand may be tapering off and ammo for a short squeeze may be in short supply.

Read the ZeroHedge analysis for yourself.  Even the best of analysis may be wrong, including my own!

 

12:04 pm

SPX has declined beneath the Ending Diagonal trendline just above 4185.00, giving an aggressive sell signal.  Confirmation comes beneath Short-term support at 4148.98 (4150.00).

The NDX has declined beneath its Short-term support at 13874.41.  It is also on an aggressive sell signal.

Interestingly, the DJIA did not make a new high, leaving April 16 as the high.  It also has declined beneath its Short-term support at 33841.30, giving an aggressive sell signal.

VIX is also above its trendline at 18.20.  This may also be considered an aggressive buy (SPX sell) signal.

The NYSE Hi-Lo Index has ramped up to a high of 597.00.  Considering the weakness in the SPX, it appears that the Hi-Lo may be influenced by retail investors buying small caps.

ZeroHedge reports, “‘Government knows best’ is clearly the message from the Biden administration as once again this morning, they unveil their latest target for the nanny state… gig workers.

In November, millions of Americans voting against state-imposed laws forcing gig workers to be employees (with the victory of Proposition 22 – by a convincing 58% to 42% margin).”

 

7:00 am

Good Morning!

NDX futures made an overnight high of 14047.00, not exceeding the April 16 high of 14051.50 thus far.  Whether the options market has failed to establish sufficient mass of calls above 14050.00 due to a lack of confidence or the Cycles simply have turned is not yet determined.  However, failure to move above the April 16 high may have the effect of turning sentiment despite the reassurances of the Fed.

ZeroHedge comments, “One week ago JPMorgan’s chief equity strategist, Dubravko Lakos-Bujas, joined the bearish sellside bandwagon aka the “Doom Chorus” we profiled previously and which included such bank as Morgan Stanley, Goldman and Deutsche Bank, when writing that after “aggressively pushing the upside case for equities” for the last 12 months, and arguing for a continued melt-up  with S&P 500 reaching 4,000 in 1Q and the majority of the upside to our year-end PT of 4,400 being realized during 1H”, he warned that “easy equity gains for the broad market are likely behind us” and as a result JPMorgan’s “bullish conviction is now lower.”

Remarkably, Lakos-Bujas’ bearish reversal followed just hours after his fellow JPM Croat and permabull, Marko Kolanovic, appeared on CNBC and said that “It’s time to buy the dip” (it wasn’t clear just what dip he was referring to).

JPMorgan’s Marko Kolanovic on how President Biden’s reported proposal to raise the capital gains tax could affect the markets pic.twitter.com/nXrRzDhGly

— CNBC’s Fast Money (@CNBCFastMoney) April 22, 2021

So fast forward to today when after this afternoon’s extremely dovish FOMC statement in which there were no changes to policy, and Powell presser in which the Fed Chair pushed back on questions about rampant reflation (stagflation) as purely “transitory” despite casually mentioning that capital markets seem “frothy”…”

 

SPX futures made a new all-time high at 4207.62 after having bounced from the Ending Diagonal trendline yesterday.  Wave [v] is equal to Wave [v] at 4240.00, while the Cycle Top resistance is nearing 4260.00.  his appears to be the final probe to the top.

ZeroHedge reports, “S&P Futures roared to new record highs above 4,200 and Nasdaq futures jumped 1% on Thursday as Powell’s dovish assurances and blow-out earnings from Apple and Facebook powered a rally in tech stocks and cemented conviction the world’s largest economy is resurgent ahead of GDP numbers and jobless claims data which are expected to show further improvements.  At 7:30 a.m. ET, Dow e-minis were up 130 points, or 0.38%, S&P 500 e-minis were up 28.00 points, or 0.67%, and Nasdaq 100 e-minis were up 144  points, or 1.03%.”

 

VIX futures made a low of 16.78 in the overnight session, a 69% retracement of the surge out of the Master Cycle low.  The coiling action of the last week appears to be making a bullish pennant, with the potential of sending the VIX above the 50-day Moving Average.

 

USD futures made a new low at 90.42 on day 272 of a very stretched Cycle.

ZeroHedge reports, “It’s “not time yet to think about tapering”… was the simple confirmation of what everyone already knew and yet that sent the dollar lower, yields lower, stocks higher, gold higher, and crypto higher…

The Dollar made the biggest headlines, dumping to two-month lows…

 

 

The GSCI Ag Index pulled back from its Tuesday Master Cycle high (day 265).  However, the price of foodstuffs continue to rise.  In addition, the Elliott Wave structure may not be complete to the upside.  The standard correction above a Head & Shoulders neckline is to retest it before moving higher.  Ag prices have risen by 79% in the past year.  It may rise considerably more, given the global conditions.

ZeroHedge observes, “Yesterday we explained why with prices already soaring, global inflation was about to go into overdrive as the leading food price indicator that is the Bloomberg Agri spot index hit the highest level in six years.

In a nutshell, this is a problem since food is a large component of CPI baskets in Asia, and “this large inflationary impulse in the region that houses more than half the world’s population should result in higher wage costs in the factory base of the world. As CPI and PPI rise in Asia, it will feed through globally in the months ahead.”

 

TNX rose to a new high at 16.72 this morning.  The Cycles Model shows a building strength starting in May ands rising through the first week of June.

ZeroHedge observes, “In case you gave up on yields moving higher yesterday, take a look again. US 10 year at 1.65% and the 5 year at 0.89%.

This space trades like a cork in water, you push it down and it pops back up.

This could get “dynamic” to the upside should we close a little higher…Key levels for the 10 year are 1.70, then 1.75%, and for the 5 year 0.9% and then recent highs around 0.95%. ”