11:15 am
The Ag Index may be reversing at the 50-day Moving Average at 457.99. If so, it may be due for a probable sharp Master Cycle low near the 61.8% retracement level at 388.00 by the end of next week. Be prepared for a surge in volatility.
10:56 am
BKX, our liquidity proxy, is advancing slowly higher on day 258 of its Master Cycle. The Cycles integrate both time and price. The time may be now, but the price is still not achieved. The Cycles Model suggests possible strength through Monday, which is still in the reversal window. The minimum price may be the Cycle Bottom at 87.68. However, I have yet to see a Head & Shoulders formation where the bounce after the trigger event has not reached the neckline. The Alternate view is a possible acceleration lower in a failed retracement. Very dangerous.
ZeroHedge observes, “It’s not just the credit markets that are sending out a signal of distress. A key barometer that the Fed watches, the St. Louis Fed Financial Stress Index, is telegraphing a similar message about the state of the US economy.
While the spread between high-yield and investment grade debt captures one major variable, the Fed’s gauge comprises a host of yield spreads, interest rates and other indicators, making it a veritable one-stop-shop.
The average value of the index is intentionally meant to be zero, capturing a moment in time when the financial markets are in a “normal” state, with values above indicative of heightened stress.”
8:15 am
Good Morning!
SPX futures are higher, nearly reaching the 50-Day Moving Average at 4012.62. As mentioned earlier, this appears to be an effort to end the quarter on a positive note, no matter how small the gain. However, it may be reaching a Cyclical Pivot point this morning that could end the bounce rather abruptly.
In today’s op-ex, attempts are being made to elevate SPX over 3990.00 where long gamma begins. Max Pain is at 3970.00 and short gamma begins at 3950.00. There is a wall of calls at 4030.00 that may propel the SPX higher, should it be reached. Open interest appears to be bullish, giving an opportunity to sell the bounce. In other words, this is not the place to join the crowd.
ZeroHedge reports, “US futures extended gains for a second day on Wednesday as banking sector fears continued to ease, while Nasdaq futs got a boost from a rally in Asian tech stocks following the announced split of Chinese internet giant Alibaba which sent the Hang Seng up 2.1% and HSTECH +2.5%.
S&P 500 and Nasdaq 100 futures contracts were up 0.8% as of 7:30 a.m. in New York, trading at 4,034 and 12832 respectively.
The S&P 500 is set for a flat month, while the Nasdaq 100 has surged nearly 5% in March and more than 15% in Q1 – its best quarter in nearly three years and its first rise in 5 quarters – as tech stocks, especially megacaps, found renewed favor with investors.”
While NDX futures appear to be strong, it may have already peaked on March 22nd. The Cycles Model points down, with the next low at the end of April. This is no time to buy tech, mega- or otherwise.
In QQQ (307.12) options, Max Pain is at 305.00, a hotly contested level. Long gamma starts at 308.00, while short gamma begins at 304.00.
ZeroHedge observes, “Today was quiet from the headlines perspective; but a notable undercurrent is emerging beneath the surface as MegaCap tech – a trade that had been crushing it in recent weeks on the back of massive flows into a handful of tech gigacap “Generals”, with Goldman noting that going back to 1990, the extent of S&P 500 outperformance over Equal-Weight S&P 500 this month – NDX>Small Caps by 13% MTD – has only been eclipsed twice (March 2020, June 2000)…
… has started to underperform the broader market again while recent laggards (Energy/Materials) are outperforming.”
VIX futures sank to a low at 19.16, an 84% retracement of its rally in a complex correction that can only be a Wave B. That allows the most powerful Wave to follow.
In today’s VIX options, Max Pain is at 22.00. Short gamma begins at 19.00, but with no downside follow-through. Long gamma begins at 25.00 with strong open interest to 45.00.
ZeroHedge remarks, “VIX starting to realize SPX is doing nothing
The roundtrip in VIX post the SBV crisis is pretty much done…
Source: Refinitiv
Hedge funds have basically done nothing
Gross exposure has moved higher, but more interesting is the fact net exposure according to GS prime data has done nothing for months. Fat and flat anyone? Brian Garret adds: “…this is one of the longest stretches in our dataset where exposure to the market has not shifted meaningfully in either direction …”
TNX has reached a morning high of 36.10, having issued a buy signal by rising above the mid-Cycle support/resistance at 35.29. Overhead resistance is at the 50-day Moving Average at 36.60. The new Cycle may be short but powerful, with a possible target at the Cycle Top at 43.34.
USD futures are consolidating after making a slightly new low at 102.03. The trend is now up, although hard to recognize yet. The USD is not due to crash anytime soon. Domestic analysis overlooks the fact that the banking crisis is much worse in Europe, for example, due to negative interest rates since 2014. In addition, the war in the Ukraine may bring a flood of deposits to the US for safekeeping, thereby strengthening the USD.
ZeroHedge gives the domestic analysis, “Peter Schiff appeared on NTD News to talk about the bank bailout and the March Federal Reserve meeting. During the conversation, Peter explained that everybody is going to pay for these bailouts because they will ultimately devalue the dollar as inflation skyrockets.
During his press conference after the March FOMC meeting, Jerome Powell said the banking system is “sound and resilient.” Peter said it’s not sound at all.
It’s a house of cards that is starting to collapse.”
Gold futures are higher as they continue to rise into their Master Cycle high, due early next week. The Cycles Model suggests this week may end in strength with a turn due by mid-week, next. Gold may be ready for accumulation by the end of Summer.