April 18, 2024

12:45 pm

SPX bumped up against the 2-hour Cycle Bottom resistance and reversed downward.  In the process it may have completed Minor Waves 1 and 2.  If so, Wave 3 may have begun, with serious repercussions.  Wave 3 may take up to 2 weeks and may have a minimum target near 4800.00.  Once beneath the prior low at 5007.00 a panic decline may develop.  Stay alert.

ZeroHedge notes, “The impulse from central-bank reserves in the US, or the change in their change on a monthly basis, points to further short-term resistance for stocks.

The Federal Reserve’s quantitative tightening program is ongoing, but bank reserves still remain almost $400 billion higher than when the Fed began QT in June 2022, even as the total size of the Fed’s balance sheet steadily contracts.”


8:00 am

Good Morning!

NDX futures rose to 17617.60 this morning.  Should it not be able to exceed yesterday afternoon’s high at 17630.00,, it may plunge beneath the 100-day Moving Average at 17335.83.NDX may be in a correction, but in bear markets, corrections may go deeper.  The 100-day offers yet another sell trigger that may have short-term consequences for the NDX.  The next possible support may exist near 17300.00.

This morning’s options chain shows Maximum Investor Pain at 17650.00.  Long gamma may begin at 17680.00 while short gamma may start at 17625.00.  The key to today is to rise above the heaviest short gamma beneath 17600.00.

ZeroHedge remarks, “1 – Triggers were crossed

Looks like the first CTA puke officially started yesterday. Likely that there will be more. UBS trading desk reports:

1. NQ1 sell triggers were crossed at 11:32am and 12:06pm

2. The largest futures volume spike started at 11:30am-11:45am interval at 187% of average ($18bn)

3. After 2 hours of selling, excess flow turned to small buying @ 12:45pm for both Nasdaq and S&P futures – suggests CTA selling pressure is over but next trigger is only -0.5% away”



SPX futures rose to 5045.60 this morning, but may have started a retreat from that level.  A decline beneath yesterday’s low at 5007.25 may ignite selling down to the 1987 trendline at  4950.00, where a bounce may occur.  The Cycles Model suggests a larger bounce may occur toward the weekend.

Today’s op-ex shows Max pain at 5050.00.  Long gamma may start at 5070.00 while short gamma may begin beneath 5035.00.

ZeroHedge reports, “US equity futures are higher after four consecutive days of selling, although that is the same pattern we have seen all week as futures initially rise only to dump later in the day. As of 7:40am, S&P futures are up 0.3% while tech stocks were set to outperform, pushing the Nasdaq 0.4% higher after TSMC delivered a better-than-projected revenue outlook. An index of global chip stocks and AI poster child Nvidia fell into a technical correction amid the recent selloff, with Evercore ISI analyst Julian Emanuel thinking this is only the start, with the downdraft in stocks only starting and set to continue through the rest of 2024. The dollar steadied, while US Treasuries pared an earlier gain to trade flat. In Europe, major markets are higher with Spain/France leading and Germany lagging. Commodities are mixed: oil is falling further; precious and base metals are higher. Reports from Netflix and L’Oreal are due after the close of their respective markets. Investors will also be parsing initial US jobless data, the latest Leading Index and Existing Home Sales data, as well as speakers from a raft of central banks.”



VIX futures declined to 16.83 overnight, then have resumed their climb.  It is possible that last night’s dip was sufficient to complete a 60% retracement of this week’s rally.  A breakout above the October high may be in order.

Next Wednesday’s op-ex shows Maximum Investor Pain at 16.00-17.00.  Short gamma dwells between 13.00 and 15.00.  Long gamma begins at 18.00 and stretches to 39.00.


TNX futures rose to 46.22 this morning, suggesting the cash market may do the same.  The Cycles Model suggests the current Master Cycle may end by this weekend.  However, ti may go out in strength, leaving the Cycle Top at 48.38 as fair game.  Of course, the linear-thinking markets may react strongly to this development, causing a stir in the equities markets.

ZeroHedge notes, “The risk of a squeeze in US funding markets is increasing as the yield curve bear steepens, i.e. longer-term yields rise more than short-term ones. More attractive bill yields and climbing interest-payment costs on government debt are depleting reserves and reducing their velocity, increasing the chance of a disorderly upswing in funding rates, as well as posing a risk to the stock market.

The bond market intimidates everybody, in the oft-cited words of Bill Clinton’s chief strategist James Carville. That description is apt today as rising yields reverberate across the financial system. Funding risks are intensifying again, increasing the chance of a rate-volatility driven correction in stocks.”


USD futures are consolidating after making their Master Cycle high on April 16.  The Cycles Model suggests a month-long sideways-to-lower correction before resuming its rally.




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