June 3, 2022

11:41 am

NDX gapped through mid-Cycle support at 12752.97 and retested it on the bounce.  It is on a sell signal with a probable decline to the week of June 20, per the Cycles Model.


10:55 am

SPX has crossed beneath the Lip of the Cup with Handle formation, setting off a sell signal.  It has bounced back to retest the line at 4120.00, but is unlikely to go back above it.  Confirmation may occur beneath the mid-Cycle line at 4088.70.

ZeroHedge offers an explanation, “After ramping for days despite all the ‘bad’ news from US macro data, today’s ‘good’ news from the BLS (with payrolls printing better than expected) has prompted a deeper sell-off in stocks…

It appears that the Fed Hawks have regained the narrative this week, and rightfully so. As Nomura’s Charlie McElligott the Bostic “September Pause” meme last week was a “low Delta” fiction which required multiple Fed-speakers (and Bostic later himself) to forcibly “clean-up” as it created a counter-productive impulse “easing” of financial conditions.”


7:00 am

Good Morning!

I am jotting a few things this morning before an 8:00 am appointment.  I may be returning after the open.

SPX futures declined to a morning low of 4152.50 and is lingering near that low.  This morning’s Employment Situation Summary may be pivotal to a probable reversal.

In today’s expiring options, Max Pain is at 4170.00.  Calls dominate at 4180.00 and above, while puts dominate beneath 4130.00.  Short gamma begins at 4100.00.  The question is, how much control do the dealers have in the event of a bad jobs report?

ZeroHedge observes, “When will the bear market end? That is the question to which everyone wants an answer. While there is no specific answer to that question, there are indicators and technical measures that provide some guidance. From the portfolio management perspective, those are the parameters we must operate from to minimize capital destruction and limit emotionally driven mistakes.

2022 has been a year unlike many investors have seen in their investing lifetimes. While there are some that went through the 2008 bear market, there are fewer still who lived through the “Dot.com” crash. Such is the nature of “real” bear markets that tend to destroy investors and drive them from investing in the financial markets permanently.

While there are many “buy and hold” practitioners suggesting investors just dollar-cost-average their way through a downturn, reality tends to be far different. When markets decline enough, there is a point where every investor changes from “Buy The F***ing Dip” to “Get Me F***ing Out.”


VIX futures are higher after making a probable Master Cycle low yesterday on day 255.  You may notice that the Uptrend remains intact and the correction appears complete.


The NYSE Hi-Lo Index made a small corrective move higher, closing above 0.00 at the end of the day.  However, it is very close to triggering a meaningful downdraft beneath zero after making its Master Cycle high on Tuesday.  The decline in the highs since November is striking.


TNX futures are flat thus far, but the Cycles Model call for a day of trending strength.  A breakout above the Cycle Top at 30.42 may not be out of the question.

ZeroHedge comments, “After Thursday’s ADP employment data, expectations from today’s non-farm payrolls print are somewhat muted. However, unless we get a shockingly low number, Treasury traders may look through it.

The median forecast for jobs expansion in May is 320k, a much slower pace of expansion than the 428k we got for April. However, the scatter of expectations is considerable, ranging from 250k to 450k. If the actual print comes in around the upper end of the forecasts, it would be hard to make a case for an emphatic selloff in rates. The markets are already pricing in almost 200 basis points of increases from the Fed in the remainder of the year. Given that the monetary authority has promised to go at 50-basis point increments both this month and next, we are essentially talking about another 100 basis points from the three subsequent meetings, meaning there is already another 50-basis point move lurking in the calculations. So it would be a really unrealistic ask to go beyond that for now.

If the number is shocking low, say, about four standard deviations away from the mean (giving us a print below 150k), we may get a big rally in rates, for the markets would start worrying about whether the economy can hold its poise amid the Fed’s hiking cycle. However tenuous the correlations are between ADP and NFP, yesterday’s lower-than-forecast print on the former should have already made traders scale down their expectations somewhat.




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