SPX is challenging the Lip at 4120.00 after what appears to be a “failed” Wave [v] of Wave C. Dealers don’t want to let go of their grip prior to op-ex, but I suspect their hold on the market is slipping. Sell beneath 4120.00 if you haven’t already done so.
ZeroHedge observes, “Confirming what we reported two days, SEC Chair Gary Gensler said he has asked agency staff to consider requiring brokerages to route individual investors’ orders to buy or sell stocks into auctions, as part of an effort to increase competition in the market. These proposed (and unprecedented) changes to market structure would make it virtually impossible to frontrun retail orders.
“Right now, there isn’t a level playing field among different parts of the market: wholesalers, dark pools, and lit exchanges,” Gensler said in remarks prepared for an event hosted by Piper Sandler.
SPX has completed a second, smaller Triangle formation visible on the hourly or 10-minute charts. Triangles “buy time” to stall the inevitable final move within a series or formation. After a bit of fine tuning, the final target may be 4194.00. Be prepared to go short, if not already positioned. This rally must be sold.
SPX futures retreated this morning, but remain well above the Lip of the Cup with Handle at 4120.00. The Triangle formation is playing out, indicating a final probe in Intermediate Wave (2) before the reversal. Wave relationships suggest a possible high near 4190.00. Today is day 248 in the Master Cycle. possibly leaving 8.6 more market days to the low on day 260. The Lip is the tripwire for this formation.
We have continually been teased by the grip of options expiration and the dealers’ machinations to avoid more than the minimum payout ()Max Pain for investors). Today’s op-ex shows Max Pain at 4130.00. Calls are favored above 4140.00 and long gamma lies at 4200.00. Puts are favored beneath 4110.00 with short gamma starting at 4100.00. Today may be a very volatile day in equities.
ZeroHedge reports, “After yesterday’s bizarro rally, US futures and European bourses dipped ending two days of gains, as yields reversed Tuesday’s slide and climbed ahead of highly anticipated CPI data on Friday and a hawkish ECB meeting tomorrow, as traders try to predict the Federal Reserve’s policy path. Nasdaq 100 futures were flat at 7:30 a.m. in New York, with contracts on the S&P 500 and Dow Jones also modestly lower. European markets also dipped, with Credit Suisse shares tumbling after the Swiss bank announced that it expects a loss in the 2Q and is weighing a fresh round of job cuts. Meanwhile, Asian stocks rose as Beijing’s move to approve a slew of new video games bolstered bets that the outlook is improving for the Chinese technology sector. The yield on the 10-year US Treasury resumed its advance, climbing to 3%, while the dollar rose as the yen cratered to fresh 20 year lows, flat and bitcoin traded around $30K again.”
VIX futures are modestly higher, inferring that yesterday’s move may have put in the Master Cycle low at 23.88 on day 260. In today’s op-ex, puts are favored at 24.00 and below while clls are favored at 25.00 and above. Long gamma lurks at 30.00. Short gamma is not discernible.
The NYSE Hi-Lo Index topped out at 110.00at mid-day yesterday, but closed at 32.00. I’m looking for a reading below zero for a sell signal.
ZeroHedge (TME) observes, “The new JPY crash
JPY continues moving like a small cap stock, despite being the world’s third most traded currency. These moves are serious. Note that JPY 1 month vols have started to move rather violently again. Big currencies aren’t supposed to move like this, unless…
Will sleepy VIX start to move (again)?
The latest surge in JPY volatility matters. Last time it spilled over with a time lag. Let’s see if VIX decides to focus on stuff beyond the SPX moves. The gap between JPY 1 month vol and VIX is rather wide again.
TNX spiked to 30.40, matching yesterday’s high but not exceeding the Cycle Top resistance at 31.02. Trending strength returns early next week. Should TNX not break out this week, it is likely to do so next week.
Yesterday ZeroHedge reported, “Unlike last month’s stellar 3Y auction, today’s sale of $44 billion in 3 year paper, the first auction of the QT era (if not really because the first actual TSY maturity does not take place until June 15), was mediocre at best.
Starting at the top, the high yield of 2.927% was above May’s 2.809% by 12bps, the highest since Nov 2018 and also tailed the When Issued 2.917% by 0.1 basis point, the first tail since march, and only the second tail for a 3Y auction of 2022.
The bid to cover of 2.453 was well below last month’s 2.595 but in line with the six-auction average of 2.470%.”
USD is still consolidating, with a potential Master Cycle low by mid-June. The next move in the Broadening Wedge formation is a decline to the lower trendline/mid-Cycle support at 97.32.