SPX futures made a 78.6% retracement yesterday, then started easing down in the overnight market. For tomorrow’s expiring options, Max Pain is at 4570.00. It is bounded by long gamma at 4600.00 and short gamma at 4500.00. The Cycles Model shows trending strength reappearing today and Friday. Should SPX decline beneath mid-Cycle support at 4502.40, the trend will be down.
ZeroHedge reports, “After initially trading sharply higher around the European open, US stock futures dropped to session lows as traders digested the latest developments in the Ukraine war, including a EU proposal to ban Russian coal imports, the same coal which we profiled yesterday as hitting record highs on lack of Russian supplies and where Russia accounts for nearly half of all European coal imports… it makes one wonder if Europe can’t stop, won’t stop until it commits energy suicide.
In any case, S&P500, Nasdaq 100, and Dow Jones futures all fell 0.3% each, with Bloomberg adding that the European Commission is also expected to propose banning most Russian trucks and ships from entering the bloc, although the EU isn’t planning to sanction oil or gas for now.”
VIX futures rose above 19.00 after extending its Master Cycle low to day 279. The lengthy Cycle may be attributed either to dealers and hedge fund attempting to push the SPX higher through the back door or it may be a huge influx of retail investors buying the short VIX ETFs. In either case, someone will be burned. The Cycles Model suggests a rally in VIX through the end of the month is imminent.
TNX is marching higher as it may touch the rising trendline above 25.00 before the final retracement down to the Cycle Top support at 22.50. This move may happen yet this week, as trending strength comes roaring back next week.