June 7, 2023

9:42 am

The Ag Index was repelled by its 50-day Moving Average at 442.50 on Monday and is seeking support at its Cycle Bottom at 427.46.  It may probe lower, to the bottom trading channel trendline near 415.00 in the next few days in a very complex retracement.  However, the placing of the Master Cycle low (currently at May 31) may be resolved.  I had breakfast with a soybean farmer who mentioned that only half of his seeds had sprouted due to dry weather.

ZeroHedge notes, “Farmers in Corn Belt states have been very concerned about their crops this spring as drought expands across the Heartland.

The latest weekly report from the US Department of Agriculture shows the US corn crop deteriorated by the most in nearly three years as drought conditions worsened in the Midwest.

About 64% of the nation’s corn crop was rated good-to-excellent in the weekly report, a five percentage-point plunge that was the most significant decline since August 2020. The drop was more than double of any analysts surveyed by Bloomberg.”

TheEpochTmes reports, “The Irish government is facing a backlash after reports broke of a proposal to kill off as many as 200,000 cows over the next three years in an effort to meet the country’s emissions reduction goals.

Last week, the Irish Independent reported on a government document describing plans for a potential cull of up to 65,000 dairy cows per year for the next three years. The paper reportedly obtained the documents from Ireland’s Department of Agriculture through a freedom of information request. In all, killing off 200,000 cows would wipe out about 10 percent of Ireland’s dairy cow population.”

 

9:31 am

BKX continues its retracement rally with a target at 85.95 by early next week.  The last probe may be met with a burst of strength through the weekend to finish its Master Cycle.  Be aware that the reversal may come quickly and savagely as rising interest rates break out.

 

8:05 am

Good Morning!

NDX futures continue to consolidate beneath Monday’s high.  Today completes an 18.5-month Cycle from the high on November 22, 2021.  NDX is currently in throw-over above its Ending Diagonal formation.  An aggressive sell signal may be issued beneath the Cycle Top support at 13988.09.  Confirmation of the sell signal may come at the conjunction of the lower Ending Diagonal trendline and the August high trendline near 13750.00.

Today’s op-ex shows Maximum pain for options investors at 14550.00.  Long gamma begins at 14600.00, while short gamma starts at 14525.00.

ZeroHedge comments, “On Friday, following the blowout jobs report, we observed a remarkable reversal in the surging – until now – tech/small caps ratio (represented in this case by QQQ/RTY), and asked if the blowout in tech names (at the expense of small cap) was finally over, and if it was small caps’ turn to shine.

The answer, just two days later: a resounding yes.”

 

SPX futures are also consolidating in a narrow 15-point range beneath the Monday peak.  The 17.2 month Cycle meets its numerical apex on Friday, but Cycle turns may be influenced by the DJIA or the NDX which both peak today.  The fact is, Monday’s peak may already fulfill the Cycle requirements which may be confirmed by the appropriate reversal.  SPX may already be considered to have an aggressive sell signal by having reversed beneath the Cycle Top resistance at 4288.50.  An additional aggressive sell signal comes beneath the upper Ending Diagonal trendline at 4250.00.  A confirmed sell signal comes beneath the lower Ending Diagonal trendline flanked by the intermediate-term support at 4154.83 and the 50-day Moving Average at 4127.71.

Today’s op-ex shows Max Pain at 4275.00.  Long gamma begins at 4300.00 while short gamma starts at 4150.00.

ZeroHedge reports,” Futs are starting flat for a second consecutive day, having reversed earlier losses, after China reported a bigger-than-expected drop in exports and OECD warned of a weak global economic recovery. Shares are trying to build on Tuesday’s gains as a rally in megacap stocks that had propelled the S&P 500 to the edge of a bull market continued to fizzle. As of 8:00 am ET, S&P futures were modestly in the green at 4295 while Nasdaq 100 futs were up 0.2%The Bloomberg Dollar Spot Index traded near the day’s lows, boosting most Group-of-10 currencies. Treasury yields were little changed amid listless trading global bond markets. Oil and gold were flat, while Bitcoin retreats a day after climbing more than 5%. Today’s macro data includes mtge applications, trade balance, and consumer credit. Ultimately, the macro data prints are light for the balance of the week.”

 

 

9:40 am:  Note that VIX made a new low at 13.90 this morning on day 271.

VIX futures rose from their Master Cycle low at 13.95 yesterday (day 270).  This low has not been seen since January 2020 and marks a 40-month Cycle low.  This bearish extension in the VIX may have been the product of the flood of liquidity injected by the Fed to save the banks.  The effort to refill the depleted treasury may reverse this phenomenon.

Today’s op-ex shows 16.00 as the most hotly disputed strike and Max Pain, as well.  There is not short gamma.  Long gamma starts at 17.00  and potentially runs to 47.50.

 

TNX may be rising from its mid-Cycle support at 36.81 to continue its journey to the Cycle Top at 41.20.  Trending strength may get a boost this weekend and continue through the end of the month.

 

USD futures appear to be consolidating near yesterday’;s low.  The short-term direction appears to be lower, with a potential Master Cycle low in the next week.

 

 

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