BKX, the market’s liquidity proxy, may have made its Master Cycle high on Friday. Although there may be a few days left in the current Cycle, the retracement structure may be complete. Evidence of this may be a decline beneath 95.00.
ZeroHedge remarks, “Buried on a Saturday morning, amid the hubbub of politicians and media scrambling to signal their virtue over the 3rd anniversary of ‘January 6’, Dallas Fed President Lorie Logan dropped a couple of tape-bombs that suggest Powell and his pals are ‘worried’ about more than just jobs and inflation.
Notably, prior to joining the Dallas Fed last year, Logan was heavily involved in the financial plumbing of the Fed’s policy mechanism as SOMA Manager at the NYFed, and so her views are going to carry a lot of weight on the FOMC – and the two subjects she discussed point to potential financial stability concerns.
Her first point can be summarized as a concern that:
‘Liquidity is draining (too damn) fast…'”
SPX made an exact 38.2% retracement this morning of last week’s decline. The decline may resume with considerable strength imminently. Today may be the start of one of those “limit down” days mentioned on Friday.
NDX futures dropped to 16222.00 before a morning bounce back to the flat line. NDX is flirting with a confirmed sell signal beneath Intermediate support at 16296.25. The next support to fall may be the 50-day Moving Average at 15829.21 as the decline may pick up momentum this morning.
Today’s options chain shows 16300.00-16310.00 being highly contested. Long gamma may begin at 16340.00 while short gamma may begin at 16200.00.
ZeroHedge remarks, “Late last year, Goldman’s Prime Brokerage, the bank’s most actionable client-facing division which keeps daily tabs on all the latest hedge fund activity and is happy to share the data with a select group of top clients, launched its weekly US Equities Weekly Rundown: a weekly must-read compilation that aims to consolidate the latest positioning and flows intelligence, market themes, and actionable ideas from thought leaders and risk takers across the GS franchise. It is an indispensable piece for every serious trader, and below we excerpt from the latest full report for the benefit of our premium and professional readers (full analysis available to our pro subscribers in the usual place).”
SPX futures declined to 4677.00 over the weekend, then bounced to a near recovery of Friday’s close. The Cycles Model calls for an intensification of the decline which may start after the opening bell.
Today’s options chain shows Max Pain at 4705.00. Long gamma begins at 4720.00 while short gamma starts at 4700.00. Options do not provide insurance. They simply transfer risk. At this point the risk is on the dealers who must sell short to cover losses in a declining market.
ZeroHedge reports, “US stock futures dipped on Monday and Treasury yields gained as traders jostled for position in the wake of last week’s selloff coupled with at very confusing jobs report which was strong at the headline level and a disaster when looked closer. As of 7:40am ET, S&P 500 futures declined 0.1% with Boeing retreating almost 8% after a fuselage section on a 737 Max 9 aircraft ejected during a flight over the weekend, leading to another FAA-mandated grounding of the aircraft. Spirit AeroSystems, which installed the panel, slumped 21%. European stocks followed declines in Asia. The dollar was flat, bitcoin reversed earlier losses and and oil slid almost 3% after Saudi Arabia cut official selling prices for all regions amid persistent weakness in the market.”
VIX futures rose to 14.18 this morning before settling back beneath the 50-day Moving Average at 14.09.00This is a good position to accumulate VIX shares and futures as a hedge against falling stock prices.
Wednesday’s options chain shows Max Pain at 12.50. Short gamma appears to be non-existent while long gamma begins at 15.00.
TNX rose to 40.63 over the weekend after challenging the Head & Shoulders neckline at 41.00 on Thursday. The Cycles Model suggests a burst of strength may be due today, possibly launching it over the line.
ZeroHedge remarks. “US data from last week were not enough, from the perspective of the economy, to endorse the amount of rate cuts from the Federal Reserve expected by the market.
Payrolls and the jobs data released last week demonstrated why the market – and the Fed – shouldn’t take it too seriously as a real-time snapshot of the labor market.
On the surface, the data was solid next to expectations, but if you go digging you will always find elements to back up a bullish or bearish case.”