May 1, 2024

4:00 pm

SPX made a 75% correction of the decline, then puked to the lows.  This is not a good sign.  Could this be the beginning of a Wave 3 decline?  Comments in the morning.

ZeroHedge remarks, “Powell to traders today…

…but who will have the last word?


11:10 am

SPX is in no-man’s land, waiting for the verdict.  What is announced and interpreted today may have a strong effect on the direction of the SPX.  More to come after 2:00 pm.

ZeroHedge observes, “Higher for Longer Anxiety

Markets are very, very nervous going into the FOMC decision. The Wall Street Journal’s Timiraos tells us the Fed’s message will be “higher for longer”, language that had been dumped in December.”


8:00 am: Day 23 of the Nineveh Cycle (April 8 – May 18)

Good Morning!

SPX futures declined to 5008.90 thus far this morning, threatening the 1987 trendline at 4970.00 and a Head & Shoulders formation at 4953.56.  The probability of a follow-through to the downside is high.  Traders are still pricing rate cuts into the market amidst a declining GDP and sticky inflation.  Will their hopes be dashed…or will Powell offer some hope for easing?

Today’s options chain shows short gamma beneath 5065.00.  Can Powell save the day?

ZeroHedge reports, “US equities were set for a second day of losses, as investors weighed disappointing tech earnings and braced for today’s Quarterly Refunding Announcement and Fed rate decision and Powell press conference where the Fed chair is expected to signal a delay to rate cuts. S&P 500 futures slid 0.4%, while Nasdaq 100 contracts dropped 0.8% as of 7:40 a.m. in New York, extending losses from Tuesday with markets digesting the surge the employment cost index, a measure of wages and benefits, driven by soaring union and government wages as well as the drop in US consumer confidence to its lowest since level 2022. Europe’s Stoxx 600 gauge edged lower in holiday-thinned trading. The Bloomberg dollar index was little changed, while the two-year Treasury yield held near a six-month high. Gold rebounded from yesterday’s rout but bitcoin did not and instead tumbled deeper below $60,000 driven by European selling. It’s a busy calendar and besides the FOMC, we also get the April ADP employment change (8:15am), April US manufacturing PMI (9:45am), March construction spending and JOLTS job openings and April ISM manufacturing (10am).



Trannies all-time high remains at November 1, 2021.  A second attempt to make a new high this year failed with dire consequences.  Dow Theory tells us that this non-confirmation is not healthy for the rest of the market.  In addition, there is a Head & Shoulders structure that indicates a major decline, should it be breached.  Trannies are beneath all Cyclical supports, including the mid-Cycle support at 15404.00.

ZeroHedge remarks,”Remember Trannies?

Dow Jones Transport index closed at the lowest levels of the year, not far from the 200 day moving average. These days it is all about AI, but do we worry about the weakness in the Trannies?”



VIX futures have risen to a new high at 16.15 after putting in its Master Cycle low on Monday, day 256 of the old Master Cycle.    The new Master Cycle may last until early July.  This does not bode well for equities.

Today’s options chain shows Max Pain at 15.00.  Short gamma inhabits 12.50 – 14.50.  Long gamma begins at 16.00but doesn’t show a lot of enthusiasm, yet.


TNX continues its consolidation, awaiting a directional push.  Whichever direction it takes may last until May 18.  Today traders will monitor Powell’s plan to taper the balance sheet runoff.  Remember, the Fed has no control over interest rates.  It can only follwo what the market dictates.

ZeroHedge comments, “How the Treasury intends to meet its borrowing requirements – the mix between shorter-term bills and longer-term coupons – will strongly influence liquidity and thus the performance of risk assets.

Quantitative tightening is thus on borrowed time, and the Federal Reserve’s next move this year is still likely to be an interest rate cut, despite the re-emergence of inflation.

On Wednesday the Treasury will announce how it intends to borrow $243 billion in Q2 and $847 billion in Q3, the amounts it announced on Monday that it wanted to raise. Q2’s figure was above the previous estimate, while Q3’s number was toward the upper end of expectations. The consensus is leaning toward the increase being made up for by issuing bills rather than coupons.”


USD futures are easing lower as the market focuses on the FOMC announcement this afternoon.  Continued higher rates may strengthen the USD.  The current Master Cycle may continue through May 18.




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