May 22, 2023

8:00 am

Good Morning!

NDX futures declined to 13749.90, just above the trendline at 13720.91.  On Friday it made a new yearly high at 13874.42, on day 276 of the Master Cycle.  While the NDX may go as high as 14200.00, the Cycle is very stretched.  A decline beneath the trendline may constitute an aggressive sell signal.  Should a reversal occur, the NDX is due for a decline to the end of June.

Today’s options expiration shows Maximum Pain for options investors at 13790.00.  Long gamma begins at 13820.00, while short gamma starts at 13750.00, at the tip of the Ending Diagonal.

ZeroHedge remarks, “Nobody talks about this one

Majority of pundits are only talking about the big SPX spec short, but there are many offsetting positions, one of them the NASDAQ long…currently at rather long levels.

Source: DB

NASDAQ technicals

The break out has managed sucking people in. We continue to trade inside the trend channel. Note the 14k, give or take, is a big resistance area to watch.”


SPX futures have remained in a very narrow corridor between 4175.00 and 4197.00.  SPX managed to make a new 2023 high, but remained beneath the August peak.  The top of the trading channel is near 4220.00.  Intermediate-term support lies at 4127.30, where a potential aggressive sell signal lingers.  Although the probability of a new high was evident, the surprise came late in the day.

Today’s op-ex shows Max Pain at 4175.00.  Long gamma starts at 4200.00. while short gamma begins at 4150..00.

ZeroHedge reports, “US futures are flat as we start a new week and inch closer to the debt ceiling x-date: as a reminder, according to Janet Yellen the US could be in default in just 10 days. At 8:00am ET , S&P futures were up 0.1%, near session highs, after trading in a narrow range overnight; the tech-heavy Nasdaq was pressured by losses on semiconductor stocks after China said products from Micron Technology had failed a cybersecurity review. Micron shares dropped more than 5% in New York premarket trading, dragging down other chipmakers, including Nvidia and Qualcomm.  Asian markets are higher, while European stocks trade near session lows. Bond yields are higher, rebounding from session lows, while the USD is slightly in the green with commodities also erasing earlier losses. MegaCap Tech names are up slightly pre-market. McCarthy and Biden spoke on Sunday and will resume negotiations today. Fed’s Kashkari, a Fed dove turned hawk (and soon to turn dove again) is now open to holding rates steady in June; OIS now sees more than 80% odds of a pause at the June mtg. Biden expected ties with China to improve very shortly and considers lifting sanctions on Chinese Defense Minister.”



VIX futures rose to a weekend high at 17.43, approaching the trendline at 17.60.  Although the VIX may waver near the low, the correction appears complete.

ZeroHedge observes, “What happens when Ranges are broken? Finally some moves…

a. What is the client feedback in the last 48 hours as debt deal optimism increases? Who ya got?

  • I have been pinged more times in the past two days than all year. Clients are re-engaging and sentiment has dramatically improved. If there are positive headlines over the weekend, this rally has legs. Current short (low risk) positioning is not reflective of improving sentiment and a potential move higher.

b. Who is moving off the sidelines back into equities (said another way, was the equity demand real or covering related)?

  • S&P trading above $4200 Friday morning, which is the top end of the range. I think investors will continue to add risk next week if we see any positive developments over the weekend and the top of the range gets extended to $4300/$4400 to the topside.

c. What is client consensus and what does the consensus think about the consensus?

  • Bearish sentiment continues to wane. No one wants to be forced into the market, and that entry be the new top tick. This feels more orderly and buying the highest quality sustainable themes. The worst thing would be a correction shortly after the cover bid is completed.”


TNX may be beneath Friday’s peak, but it still appears on its way higher, adding strength along the way.  It is now above mid-Cycle support, giving it legs to go higher.  Trending strength may appear this week, but comes back in spades in mid-June.

ZeroHedge notes, “Negotiations in Washington DC over the debt ceiling have taken a big step back over the weekend, as the White House and House Republicans continue to point fingers at each other.

It seems as though he wants default more than he wants a deal,” House Speaker Kevin McCarthy (R-CA) told Fox News on Sunday. “We have got 11 days to go,” McCarthy continued, urging Biden and the Democrats to be “sensible about this.”


USD futures took a small step back after its rally last week.  However, trending strength may arrive as early as today and may continue dominating for the next three weeks.


Gold futures may resume their decline after testing the 50-day Moving Average at 1988.74.  Gold is on a confirmed sell signal.  The Cycles Model suggests that the decline may continue through mid-June.  The next support level is the mid-Cycle support at 1836.69.  Don’t be surprised should it go there.




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