April 21, 2023

8:00 am

Good Morning!

SPX futures are consolidating after having broken beneath the rising trendline on day 247.  The Cycles Model suggests that, if the reversal has been made, the next week may give us a panic decline.  The Model also suggests the decline may progress through the end of June.

Today’s morning op-ex shows 4100.00 being hotly contested with both puts and calls numbering over 25,000.  Large pockets of both puts and calls are at 50-point intervals between 3950.00 and 4200.00.  This may lead to higher volatility at the open.  The pm expiry shows Max Pain at 4135.00 with long gamma beginning at4150.00 and short gamma starting at 4045.00.

ZeroHedge reports, “US equity futures extended their recent weakness and traded near the week’s lows in early Friday trading as investors digested the latest corporate updates. Investors now await PMI data later today for further direction on the path for monetary policy. Contracts on the S&P 500 and the Nasdaq 100 drifted -0.2% lower as of 7:15 a.m. ET, as both indexes were set to end the week in negative territory, the Nasdaq underperforming slightly. Treasury yields edged higher, while the dollar advanced against other major currencies with a measure of its strength set for its first weekly gain in six weeks. Iron ore, gold and oil all decline, as the gains from the latest OPEC+ output cut are now all gone: so will OPEC cut again to reverse the slide in the one asset class that unlike stocks, everyone loves to short as a hedge for the coming recession?”


VIX futures show a probe at 17.71 as VIX rises out of its Master Cycle low on Wednesday.  While not giving a buy signal, the extreme downdraft into Wednesday’s op-ex suggests the decline may be played out, providing a good location to accumulate VIX futures, options and ETFs.

The April 26 op-ex shows Maximum investor pain at 18.00.  Short gamma runs out below 17.00, so the decline appears tapped out.  Long gamma comes to life above 19.00 and runs to 33.00.

ZeroHedge inquires, “The S&P 500 just did something it hasn’t done since 2021: The benchmark index went 19 straight days without falling at least 1% in a single session; showcasing a lack of anxiety about the stock-market advance that’s on track for its fifth week of gains in seven.

As Bloomberg notes, several explanations could be supporting the trend. One is that the earnings season – the current center of investor attention – is off to a strong start. Secondly, the mini banking crisis in March is slowly getting further in the rear-view window, and no alarming developments are adding to it this month.

“There is bearish pressure, but maybe not as much as when the banks were steadily worsening,” Sameer Samana, senior global market strategist at Wells Fargo Investment Institute, said by email.

“And it’s now being offset by bullish pressure, from folks looking at things like banks earnings and Fed deposits/loans/flows data, which have shown some improvement.”

However, at the heart of this low-anxiety, Fed-reliant market is the reflexive rout of VIX that has many asking, incredulously amid  growing recession fears, stickier than expected inflation prints, and Fed rate trajectory uncertainty: “Why is VIX so low?”





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One Response to April 21, 2023

  1. tlover tonet says:

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