9:47 am
The Ag Index continues to retest the neckline at 570.50 in preparation of another move higher. Today is day 251 of the Master Cycle. I am not looking for a turn yet, as there is an increase of trending strength due next week.
ZeroHedge reports, “About one-third of Ukraine’s farmlands may not be harvested or cultivated this year as Russia begins the second phase of the conflict in the war-torn country.
The Food and Agriculture Organization of the United Nations (FAO) noted in a report on Tuesday that the “vast destruction of crops and infrastructure due to the war jeopardizes food production.”
FAO estimates approximately 33% of the crops and agricultural land may not be harvested because of the escalating war.
In March, Ukraine President Volodymyr Zelenskyy urged farmers to sow as many fields as possible to protect the food supply, but that appears to be a challenging task considering the displacement of people (labor shortage), bombed-out fields, severely damaged infrastructure, and shortage of everything (diesel, seeds, & fertilizer).
Ukraine is considered the world’s second-biggest shipper of grains and the biggest exporter of sunflower oil. The planting season has already begun — its crop production is vital to the global food supply.”
On the other side of the world, yet another problem arises. ZeroHedge observes, “Farmers in China, India, Bangladesh, Indonesia, and Vietnam — the largest rice-producing countries could experience reduced output due to soaring fertilizer prices.
The International Rice Research Institute warns that harvests could plunge as much as 10% in the next season, equating to about 36 million tons of rice, or enough food to feed a half billion people, according to Bloomberg.
Chemical fertilizers, such as nitrogen, phosphorus, and potassium, are the most applied nutrients for high-yielding rice cultivation. Farmers have been particularly vulnerable to soaring fertilizer prices as some have reduced the amount of nutrients to save costs. This threatens future harvests as production declines could stoke food inflation for a crop that feeds half of humanity.”
9:35 am
BKX has emerged above the Lip of the Cup with Handle formation. Unlike the Head & Shoulders formation, in which the neckline is considered impermeable, the Lip of the Cup with Handle formation allows passage through it on a retest. BKX may resume is decline this weekend, if not sooner.
8:07 am
Good Morning!
SPX futures are reaching for the 38.2% retracement level at 4479.53 this morning. Today is a day of trending strength in the Cycles. It may also mean a reversal is at hand once the strength is spent. Options expiration dominates trading today, as Max Pain is at 4450.00. Gamma turns positive at 4525.00 and short gamma prevails beneath 4400.00.
ZeroHedge reports, ” US index futures were little changed, trading in a narrow, 20-point range, and erasing earlier declines as a selloff in bonds reversed with investors also focusing on the catastrophic Q1 earnings report from Netflix. Nasdaq 100 Index futures slipped 0.2% by 7:15 a.m. in New York, recovering from an earlier drop of as much as 1.2%; the Nasdaq 100 has erased $1.3 trillion in market value since April 4 as bond yields have been surging on fears of rate hikes. S&P 500 futures also recouped losses to trade little changed around 4,460. Treasuries rallied and 10Y yields dropped to 2.86% after hitting 2.98% yesterday. The dollar dropped for the first time in 4 days after hitting the highest level since July 2020, and gold was flat while bitcoin rose again, hitting $42K.
In perhaps the most notable move overnight, US 10-year real yields turned positive for the first time since March 2020, signaling a potential return to the pre-pandemic normal. But that was quickly followed by a global drop in bond yields as investors assessed growth challenges from the Ukraine war and the potential for a peak in inflation.”
VIX futures declined to a new retracement low of 20.21 on day 250 of the current Master Cycle. Trending strength comes back at the end of this week and continues to build into May, suggesting an extended Master Cycle.
TNX is consolidating just beneath its peak at 29.30 on day 258. The problem is that the EW pattern is incomplete, suggesting an extension is probable. The Master Cycles are allowed up to 17 days of variance (plus or minus) while the average remains at 258 days.
USD futures are consolidating beneath the upper trendline and yesterday’s high at 101.03 on day 263 of the Master Cycle. A reversal is anticipated at a decline beneath the Cycle Top support at 99.98.
Crude oil futures are bouncing back to retest the trendline near 104.00. It may retest Intermediate-term resistance at 105.58. A decline beneath the 50-day Moving Average at 101.98 confirms the reversal and may position crude oil for a two month decline.
ZeroHedge reports, “America’s liquefied natural gas (LNG) exports are booming amid a global energy crisis and a European drive to wean itself off Russian gas. U.S. shipments of natural gas have jumped to all-time highs this year as the United States is intent on helping Europe cut its dependence on Putin’s gas. As demand for natural gas grows, export facilities along the U.S. Gulf Coast are operating at capacity and cannot ship more LNG than they are currently doing—at least not now. ”
Gold futures are trading lower beneath Intermediate-term support/resistance at 1952.54 this morning. Gold is on a sell signal that may last for another two months, as well.