12:53 pm
SPX is advancing slowly from its pullback, but the Wave Structure requires one final push higher. The likely target may be 5300.00. Some analysts are anticipating a blow-off top, but the trend channel is straight and narrow, suggesting that the trend channel is likely to be obeyed. The shadow banking system, which has funded this rally is not eager to start another speculation binge. There is no reason to sell. However, a 10-year yield above 43.50 may dampen the animal spirits. The trading channel trendline has risen to 5163.00.
ZeroHedge comments, “Stock market optimism is at full throttle after central banks’ rate-cut reassurances, leaving investors with no reason to sell and bears with little to do but await catalysts that might derail this rally.
The Federal Reserve’s signal that three interest-rate cuts are still on the cards for this year has just propelled Europe’s Stoxx 600 index to its ninth straight week of gains, the longest winning streak in 12 years. While the Stoxx and its blue-chip counterpart the Euro Stoxx 50 may look a tad overbought, there is no real sign of the excesses that would trigger technical red flags.”
8:25 The Feast of the Annunciation moved to April 8
Good Morning!
NDX futures have risen to a morning high of 18327.20 as it makes a final probe into its all-time high. The anticipate high may be near 18500.00. Today is day 243 in the current Master Cycle, which means the turn window has opened, leaving two weeks to the anticipated turn date. Note that, at 258 days, the turn date is an average with reversals occurring about two weeks plus or minus that date. Intermediate support is at 17961.82, parallel to the Ending Diagonal trendline. A sell signal may be obtained beneath that level.
Today’s option chain shows Maximum Investor Pain at 18290.00. Long gamma may begin at 18300.00 while short gamma resides beneath 18250.00.
ZeroHedge observes, “Economists and strategists tend to look at everything through the lens of interest rates, as if these are all important in explaining market conditions. But if we look at this year’s shift in money markets, we’ve seen a significant recalibration of expectations, from seven to three Fed cuts, while stock indices hit one all-time high after another and credit spreads continue to tighten.
It suggests that central bank policy may not be the primary force at play. Instead, if it’s collective risk appetite that drives liquidity, market movements are largely independent of central bank action. The concept of endogenous money creation explains how, arguing that the (shadow) banking system itself influences the money supply through lending and borrowing.”
SPX futures have risen to a morning high at 5241.90 as SPX makes its final probe to its all-time high. The anticipated target for this final move may be 5300.00 over the next few days. However, the Cycle Model suggests that there may be another two weeks left in the current Master Cycle. The Ending Diagonal trendline is near 5150.00 while Intermediate support lies at 5092.00. A decline beneath either may constitute an aggressive sell signal.
Today’s options chain reveals Max Pain at 5230.00. Long gamma may begin at 5250.00 while short gamma is likely beneath 5200.00.
ZeroHedge reports, “It’s as if Monday’s modest dip never happened: S&P futures are trading are higher, surpassing Monday’s highs, with both Tech and small-caps outperforming, as investors keep a close eye on any potential market impact from the collapse of a major commuter bridge in Baltimore after it was rammed by a container ship. As of 8:00am ET, S&P futures were 0.4% higher, erasing Monday’s 0.3% drop, while Nasdaq futures gained 0.5%. Europe’s Estoxx 50 is similar, trading at multiyear high with utilities and financials outperforming. According to a JPM morning note, it is unclear if yesterday’s moves were tied to month-end/quarter-end rebalancing but generally those flows occur before the last day of the period. USD weakness continues as the yen just refused to drop no matter what; commodity performance is mixed with gold approaching ATHs and oil trading at a 5 month high. Today’s macro data calendar is busy with focus on Durable/Cap Goods, Home price indices, Consumer Confidence, and regional activity indicators (Dallas, Philly, and Richmond); we also get a $67BN 5Y bond auction; let’s see if it goes as smoothly as yesterday’s 2Y auction.”
VIX futures declined to 13.05 this morning. The Wave structure indicates that VIX may make one further decline beneath the 12.40 low. Should VIX make a new low tomorrow, it will have stretched its Master Cycle to an unusually long 279 days.
Tomorrow’s options chain shows Max Pain at 14.00 Short gamma lies at 13.50 while long gamma begins at 14.50.
ZeroHedge remarks, “The VIX reset
Zoom out and you see that VIX has spent a lot of time in the 12-16 range over the past 15 years. We saw low teens VIX, and even sub 10, during parts of 2017. VIX around 12 isn’t far from the “natural” floor, but we can stay low for extended periods of time.”
Source: Refinitiv
TNX may have bounced off Intermediate support at 42.32 this morning as it continues upward until mid-April. A potential target may be the Cycle Top at 48.27.
ZeroHedge observes, “Greater inflation expectations and receding recession risk leave the interest rate cuts priced in for the Federal Reserve more vulnerable than in the UK or Europe.
The market currently sees a similar amount of rate cuts in 2024 for the US, UK and euro area, with ~80 bps seen for the Fed and BOE and just over 90 bps expected for the ECB. The US is more exposed to rising inflation, which is beginning to be reflected in the market’s expectations. The CPI-fixing market has started marking up its estimates of where inflation is anticipated to be over the next 12 months after a protracted period of marking them down.”
Gold futures are consolidating between 2168.00 ans 2200.00 after making a spike high on March 21. That high may be the limit for the rest of this year and possibly longer, since the last 25 years of rally are due to be retraced, at least in part. Initial estimates of the decline suggest the first possible support may come in near 1800.00.