7:45 am
Good Morning!
My internet provider was down most of the day yesterday. They gave no reason for the outage, except the recorded messages implied that it happened in multiple locations across the country. I must also report that I will be out of my office all of next week. The chances of doing a remote blog are slim.
NDX futures have reached a new high at 14005.60 this morning. Today is day 283 of the NDX Master Cycle. The number of stocks carrying the market is now just one. The NDX Hi-Lo Index closed at -119.00.
The Cycles Model shows no outstanding events until the end of next week. From that I would infer a flat market or a mild decline for the next week. The Memorial weekend is traditionally neutral-to-positive. However, things change dramatically in the first full week of June.
Today’s op-ex shows Maximum Pain for investors at 13775.00. Long gamma begins at 13800.00. Short gamma begins at 13600.00.
ZeroHedge remarks, “Yes there was macro data: GDP second look improved, jobless claims shitshow due to MS fraud revisions, pending home sales disappointed, Kansas City Fed better than expected; and some Fed Speak (Boston’s Collins sees a ‘pause’ – like everyone else), but really this was all about Jensen Huang (who’s personal; wealth jumped over $8 billion today).
From the open, the day was all about one stock – NVDA, soaring 25% or so and adding just under $200 billion in market cap – that is 2 Intels! – and from the Oct 2022 lows, NVDA has added $665 billion in market cap…
Source: Bloomberg
That is the largest single-day market cap gain for any stock in US equity market history…”
ZeroHedge notes this morning, “Boom
The NDX/NDXE ratio attacking all time highs. It is all about a(i) few great ones.
Source: Refinitiv
Not your normal short squeeze
Nomura’s McElligott weighs in: “…this is “Long Buyers” of the Stock chasing this AI theme; Yet it will likely be a MegaCap Tech “Spot Up, Vol Up” today on UPSIDE breakout and grabbing into what is relatively cheap Gamma, as the real “short squeeze” here will likely be from frequently mentioned Overwriters in MegaCap single-name and broad Nasdaq / QQQ OTM Upside Calls seen through 2023, which now AGAIN risk going “short strikes” and getting forcibly covered which will further bid “Upside”.”
SPX futures rose to an overnight high of 4160.50, suggesting yesterday’s after noon high may be the end of the retracement. The Ending Diagonal trendline is at 4100.00, giving a confirmed sell signal. Further confirmation awaits at the 50-day Moving Average at 4087.89. The NYSE Hi-Lo Inces closed at -111.00 yesterday and is on a sell signal.
Today’s op-ex shows Max Pain at 4170.00. Long gamma starts at 4190.00, while short gamma begins at 4150.00.
ZeroHedge reports, “US equity futures are higher across the board, amid speculation that a debt deal is taking shape and may be announced as soon as today (whether or not a 0.2% spending cut “deal” is something to be proud about is a different matter) and also thanks to optimism around Nvidia and AI prospects. S&P futures are 0.2% higher, rising to 4,169 and undoing the drop from the previous two days, while Nasdaq futures are up 0.4% amid continued AI-bubble euphoria. Treasury yields are falling, most markedly at the short end, on debt ceiling optimism, while a measure of the dollar is weakening. Commodities are mostly higher led by base metals. Oil prices are set for a weekly gain, climbing higher today. Gold prices are edging higher but still set for their third weekly decline.
VIX futures may be testing the 50-day Moving Average at 18.63. The Cycles Model suggests a peak in the VIX by mid-June with a possible higher peak at the end of the month. This activity seems to be related to the debt ceiling, but there may be something else afoot.
Next Wednesday’s op-ex shows Max Pain at 19.00. Short gamma fizzles out at 16.00, while long gamma remains strong to 30.00. Not much to see, yet.
TNX continued its relentless climb higher this morning. The Cycles Model suggests a probable (minor) Trading Cycle low at the end of next week, so it may not be advisable to take any further action until the dust settles.
ZeroHedge notes, “The market’s recent re-pricing of the Federal Reserve’s rate trajectory is nothing short of dramatic. Investors will find it challenging to price Friday’s slate of data going into the long weekend while being fully mindful of the risks centered in Washington.
Just after the Fed raised rates earlier this month, the markets were assigning a more-than-50% chance of a rate cut in July and fully factoring in a reduction by September. After some hawkish jawboning from James Bullard as well as Neel Kashkari and Thursday’s better-than-forecast 1Q GDP numbers, interest-rate traders see the Fed raising rates yet again in July. Talk about the markets turning on a dime.
Will Chair Jerome Powell, who all but signaled that the Fed would stay on hold when it meets next month, be persuaded otherwise if today’s PCE data turn out to higher than the markets estimate? And will consumers’ expectations of inflation in the University of Michigan survey jump yet again, putting paid to the school of thought that inflation is oh-so-2022?
USD futures are lower this morning, although the Cycles Model does not confirm that it may last. Additional strength may be coming online over the weekend followed by another boost in trending strength over the next two weeks. A cross above the 200-day Moving Average may silence the dollar bears.
ZeroHedge opines, “Debt-ceiling worries are driving the dollar up for now, but real yields, the fiscal deficit and structural overvaluation favor the medium-term downtrend remaining intact.
All of the recent move higher in nominal yields (discussed here) has been driven by real yields. Inflation, erroneously, is seen as yesterday’s problem, with breakevens remaining near the lower end of their two-year range.
Higher real yields might be expected to be good for the dollar. The currency has indeed risen in recent weeks, but this is more to do with safe-haven demand in the event the debt ceiling becomes binding.”
GOLD futures are higher, to 1957.05 and may go as high as the 50-day Moving Average at 1996.88 in a short burst of strength. However, the decline may resume shortly with an anticipated low by mid-June.
Investing.com comments, “Gold is finding support in the $1950 area on this week’s declines but is not finding support from buyers on the rally above $1985.
Support for this trading range is provided by the area of the late January price peak, which has also acted as a pivot point more than once in this growth cycle, halting the rally. The ability to hold above this previously strong resistance for an extended period is an important signal for speculators.