May 19, 2023

3:02 pm

BKX also suffered a reversal  just beneath the 50-day Moving Average after an irregular correction.  We may see a panic decline over the next three weeks.  Note that TNX broke out this morning, signalling higher rates (and more bank losses).

ZeroHedge remarks, “Amid a major short-squeeze which has lifted the regional bank stocks almost 10% this week – the best week since Nov 2020 – CNN is reporting that during Thursday’s meeting with the CEOs of large banks, Treasury Secretary Janet Yellen told executives that more bank mergers may be necessary as the industry continues to navigate through a crisis, two people familiar with the matter told CNN.

Yellen echoed remarks from US regulators who have said there may be bank mergers in the current environment, one person familiar with the matter said.

Additionally, this is nothing new as during an interview with Reuters this week, Yellen said a certain degree of consolidation in the regional and mid-size banking sector could occur.

“This might be an environment in which we’re going to see more mergers, and you know, that’s something I think the regulators will be open to, if it occurs,” Yellen told Reuters.

Roughly translated that means expect more imminent bank failures.”

 

2:39 pm

SPX did not take long to make its reversal.  A close beneath 4160.00 may make it a Key Reversal.

ZeroHedge notes, “As we discussed last night, Goldman’s Sales and Trading desk was bombarded on Thursday by clients eager to know what has been behind the recent meltup in tech stocks. In response, Goldman shared several explanations starting with the near record Nasdaq gamma squeeze which saw the most NDX call buying since 2014…

… as well as several other mostly technical catalysts:”

 

8:30 am

Good Morning!

NDX futures reached an overnight high at 13905.00, but have eased back to the flat line.  Should NDX go higher, today is day 276 of very stretched Master Cycle.  The August high and Cycle Top resistance have both been challenged.  The Cycles Model maintains that the next move may be a decline to the October low by the end of June.

Today’s op-ex shows Max Pain at 13660.00.  There is virtually no short gamma, while long gamma begins at 13700.00 and runs to 14000.00.  If options investors have their way, NDX would rise to 14000.00. today.

ZeroHedge remarks, “Today is one of those 12 days a year where 0-DTE and monthly OpEx are the same and despite the overwhelming strength from yesterday and Goldman noting that it is a relatively small expiry with a total of $1.7 trillion notional ($735bn of this is AM expiry, with the remaining $1trillion of this SPX pm + ETF + single stock), SpotGamma believes there are some reasons for concern.

But first, Goldman’s derivatives guru Brian Garrett sets the scene:

Dealers are long ATM and downside options, but short upside tail (we saw how powerful this can be yesterday into the bell!)…

Also of note – for any breakout risk – the 1 month trading band hasn’t been this tight in years

historically, this level of “coiled spring” has a short lifespan… now it’s just a question of breakout or breakdown.”

 

 

SPX futures have reached an overnight high at 4214.00 and remain near the high thus far this morning.  Yesterday I mentioned the weekly mid-Cycle resistance at 4198.50.  Note the close was nearly spot-on.  Whether the SPX goes higher today or not, all the signs point to an imminent reversal with a decline to the end of June.

Today’s op-ex shows 4150.00 being hotly contested, with long gamma above running to 4300.00 and short gamma beneath it running to 4000.00.

ZeroHedge reports, “After breaking out to new 2023 highs, US equity futures are up small (on “debt talk progress” even though there has been zero actual debt talk progress) ahead of Powell’s speech today, trading in a narrow 10 points. As of 730am ET, S&P futures are up 0.2% to 4,220 while Nasdaq futures are up 0.1%. European stocks are up 0.8%m near session highs with Germany’s DAX set for a record close for the first time since January 2022 while the Nikkei 225 closed at a 33-year peak, as momentum carried over from Wall Street.  Bond yields reversed earlier losses and hit session highs around 3.65% while dollars are weaker. Pre-market, megacap tech, where we just saw the biggest call buying since 2014, continues to drive higher amid yesterday’s rally. Commodities are mixed: oil is set to close its best week since mid-April while base metals are lagging. Macro calendar is quiet today with the major focus on Powell’s speech at a panel at 11am ET (Fed) where former chair Ben Bernanke will also be present. Keep an eye on the key 4200 level today.”

 

 

VIX futures made a new morning low at 15.86.  Despite that, the VIX is very tightly wound up at all degrees for a sizeable breakout .

 

TNX has clearly broken out above its April high and due to go higher.  Today is already showing strength and may be due for more.  The Cycles Model suggests that TNX may continue to rise until early July.  Powell’s highly anticipated speech at 11:00 am may give further impetus to the new trend.

 

 

 

 

 

 

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One Response to May 19, 2023

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