May 7, 2024

8:00 am

Good Morning!

NDX futures are consolidating within yesterday’s trading range after retracing 75% of its decline from March 22.  While the Cycles Model allows almost two more weeks of rally, NDX appears to have reached an early turning point.  Structurally, the rally appears to be an A-B-C retracement that may be complete, or nearly so.  The lack of progress overnight at a strong Fibonacci level urges caution going forward.  Crossing beneath the 50-day Moving Average at 17941.00 may create a sell signal.

Today’s options chain shows Maximum Investor Pain at 18130.00.  Long gamma may arise at 18150.00 while short gamma

ZeroHedge remarks, “More of the same today after last week’s tepid payrolls and dovish Powell with gold, stocks, and bonds bid as rate-cut hopes inched higher.

The market is now pricing in two rate-cuts in 2024 and three more cuts in 2025

Source: Bloomberg

For now the market appears to prefer the ‘bad news’ from declining growth expectations to the ‘bad news’ from soaring inflation prints…”



SPX futures have stalled this morning after having made a 73.3% retracement of its March 28 decline.  Should SPX go higher, a strong resistance may be found at 5200.00.  While the Cycles Model allows the rally to continue for up to two more weeks, a larger/alternate Cycle turn may hasten the completion of the current Master Cycle.  A sell signal may develop beneath Intermediate support at 5138.00 and is confirmes beneath the 50-day Moving Average at 5130.00.

Today’s options chain shows Max Pain at 5165.00.  Long gamma may begin at 5175.00 with further strength above 5200.00.  Short gamma begins beneath 5160.00.

ZeroHedge reports, “US stock futures are flat after the S&P 500 and Nasdaq 100 both closed 1% higher on Monday, helped by growing optimism among investors that the economy is finally slowing greenlighting earlier rate cuts by the Fed. As of 8:00am ET S&P futures were unchanged at 5,206, trading about 1% above its 50DMA, while Nasdaq futures were down 0.2% amid some mega-cap weakness. European stocks are higher, while indexes in Japan and the UK are catching up after being closed for holidays yesterday. Shares in Swiss bank UBS jumped after it returned to profit and showed more progress in its integration of Credit Suisse. Treasuries rise, with US 10-year yields falling 3bps to 4.46%. The Bloomberg Dollar Spot Index rises 0.1%. The yen weakens 0.4% against the greenback, pushing USD/JPY up to ~154.50. The Aussie falls 0.4% after the RBA kept rates on hold and maintained a neutral stance. Oil prices advance, with WTI rising 0.3% to trade near $78.70. Spot gold falls 0.4% and bitcoin traded in a range around $64,000 with the now daily European open/US slam down pattern.  US economic data slate includes March consumer credit at 3pm, while Fed’s Kashkari is scheduled to speak twice (11:30am, 1:20pm).”



VIX futures appear to be rising from their Master Cycle low at 13.44 yesterday, on day 263.  The Cycles Model suggests the rally may come on strong for the rest of the week.

Tomorrow’s op-ex shows Max Pain at 14.50.  Short gamma resides at 14.00 while long gamma comes on strong at 15.00 and continues to 30.00.

ZeroHedge observes, “Panic is gone

Goldman’s vol panic index has completed the “round trip”.

Source: GS

Hedging ain’t expensive

Hedging overall market risk with VIX options is rather cheap. VVIX has basically not closed much lower over the past decade.”



TNX has declined through Intermediate support at 44.72 and is poised just above the 50-day Moving Average at 43.85.  The current Mater Cycle has about a week-and-a-half to go, but may turn early given enough underlying support.




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