March 24, 2023

10:13 am

Despite the horrible news, BKX investors may be about to suffer a short squeeze.  The possible targets may be from 89.06 to 96.00.  Perhaps the Financial Stability Oversight Council may offer a glimmer of hope. Large speculators may try to take profits on their shorts, only to re-engage after the squeeze is over.  The Head & Shoulders formation is in play.

ZeroHedge remarks, “Here comes the panic.

Bloomberg just reported that Treasury Secretary Janet Yellen – who was singlehandedly responsible for stoking and restarting the bank crisis on Wednesday which until that day was easing back, with her comments that nobody in charge was even talking about a uniform deposit insurance, let alone working on one – will convene the heads of top US financial regulators Friday morning for a previously unscheduled meeting of the Financial Stability Oversight Council.”

 

8:30 am

Good Morning!

SPX futures have reached a morning low of 3906.60 thus far, and cratering.  There may be some attempt at damage control going into the end of the quarter.  However, the trend is down.

Today’s op-ex shows Max Pain at 3965.00 with short gamma beginning at 3950.00 with a huge put wall at 3900.00.  Long gamma starts at 4000.00.

ZeroHedge reports, “Yesterday, while attention was still focused on the US banking system and the ongoing botched response by the Fed and especially the Treasury’s senile Secretary, who more than two weeks after SIVB collapsed, have still not been able to stabilize confidence in banks – thereby assuring the US is about to slam head first into a brutal recession, just as Biden ordered to contain inflation, as US consumer spending is now in freefall – we pointed out that something bad was taking place in Europe: the credit default swaps of perpetually semi-solvent banking giant Deutsche Bank were quietly blowing out to multi-year highs.”

 

VIX futures rose to a morning high of 25.21, just beneath trendline mid-Cycle resistance.  VIX is scheduled to continue rising through the end of April as it embarks on a strong and violent Wave (3) of [C].  Hang onto your hats.  This move is likely to meet or exceed the 2020 high at 85.47.

 

TNX has reached a new Master Cycle low at 32.95 this morning on day  261 of the Master Cycle.  It may be due for a turn either today or over the weekend.  We may be witnessing a false breakdown which may trap a lot of investors seeking refuge from the declining stock market.  Make no mistake.  The neocons want war.  As long as our country is on a war footing, we will have inflation, leaving the Fed trapped.  Stagflation, anyone?

ZeroHedge gives us the counter-arguments, “Recession indicators a ringing loudly.

Yet, the Fed remains focused on its inflation fight, as repeatedly noted by Jerome Powell following this week’s FOMC meeting. During his press conference, he specifically made two critical comments. The first was that inflation remains too high and is well above the Fed’s two-percent goal. The second was that the bank crisis would tighten lending standards which would have a “policy tightening” effect on the economy and inflation.

As shown, lending conditions have tightened markedly, and such tightening always precedes recessionary slowdowns.”

ZeroHedge comments, “Another week of banking turmoil did not halt the fight against inflation for the central banks that were scheduled to make monetary policy decisions this week. However, the Fed seems to have been impacted the most as concerns about credit tightening have averted the rise in the projected peak for the hiking cycle that Powell had announced only a few weeks ago. Nevertheless, we continue to doubt the rate cuts that have been priced in by the markets for this year, as inflation in the US remains persistent.

Banking turmoil

This week saw additional efforts to stabilize the banking system across the globe.

On Sunday, six central banks – the Bank of Canada, the Bank of England, the Bank of Japan, the ECB, the Fed and the SNB – announced a coordinated action to enhance the provision of US dollar liquidity through an increase of the frequency of US dollar swap line operations to daily from weekly, at least through the end of April. The network of swap lines is a set of standing facilities that serve as a liquidity backstop for global funding markets.”

 

USD futures rose to a morning high of 103.01 today, reversing a 12.9-day correction.  Although not evident to many, the trend in the USD is now up.  By mid-April the trend may be evident for all to see.  The uptrend may continue through the end of April.

 

Gold futures are consolidating as they complete another up-Cycle due to end at the end of the quarter.  A probable target may be 2050.00.  It is not likely to exceed the high from 12.9 months ago at 2078.80.  Please disregard the blather from the gold bugs.  Should a reversal occur in the next few days, a possible new low may occur in August.  Note the Cup with Handle formation.

CNBC declares, “Gold prices have more room to run as global banks struggle and the U.S. Federal Reserve renders another interest rate decision, potentially breaking all-time highs — and staying there.“A sooner Fed pivot on rate hikes will likely cause another gold price surge due to a potential further decline in the U.S. dollar and bond yields,” said Tina Teng from financial services company CMC Markets. She expects gold will trade between $2,500 to $2,600 an ounce.

Investors have been flocking to gold and Treasurys as bank stocks have been whacked by the shuttering of Silicon Valley Bank and Credit Suisse’s implosion.”

 

 

 

 

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