3:28 pm
SPX has reached its next resistance at 5250.00, which may ordinarily be the end of the rally. Today’s structure that triggered the probe higher was a Triangle formation that allows a final surge before the end of the Cycle. The Triangle view is that SPX may take a couple more days to make a new all-time-high. The Chart reflects that view, since Wave 5 is too small for its structure. The alternate target may be as high as 5350.00.
ZeroHedge observes, “Hot PPI initially spooked markets (yields and dollar up, stocks down) but that faded fast (on lower revisions) – but the stag-flation trend continues this week…
Source: Bloomberg
Powell did briefly spook stocks around 1030ET with the following comment:
“it’s a possibility – but I dont think it will be the case – that the next action we take will be a rate hike… most likely we will stay the course….”
8:15 am
Good Morning!
The prospect of an early Master Cycle ending is gone as today is day 257 of the current Cycle. The Nineveh Cycle is due on Saturday, May 18. SPX futures are flat, as they await the outcome of the PPI, CPI and Powell’s speech. What’s missing in that analysis is the cost of war, weighing heavily on interest rates, as our munitions and other supplies are depleted and our naval fleet is aging. The move ot a war economy will be costly (stagflationary). Critical support lies at 5135.00 to 5142.00, beneath which lies a sell signal.
Today’s options chain shows Maximum Investor pain at 5230.00. Long gamma begins at 5250.00 while short gamma starts at 5225.00. Bearish sentiment is growing.
ZeroHedge reports, “US equity futures are flat into tomorrow’s CPI/Retail Sales print with PPI the major macro data point today, while Fed Chair Powell also speaks. Futures are flat after also closing unchanged yesterday when the return of the meme stonk mania sent GME and AMC soaring, and hammered L/S hedge funds, whose short books exploded, leading to P&L carnage across the board and widespread degrossing which however did not impact index prices. As of 6:30am, S&P and Nasdaq futures were unchanged. Bond yields are down 1-2bps as the yield curve bull steepens. The USD is flat and commodities are mixed with Ags lagging. Meme Stock Mania returned yesterday with GME +74% and AMC +78%, though Bitcoin was only +3%; As JPM’s Andrew Tyler asks this morning “has the Retail investor reactivated and do they support Mag7?”
VIX futures rose to 13.88 as buying (hedging) pressure rises. The reversal out of Friday’s low was unmistakably strong. While trending strength is not in big supply for the remainder of this week, the Cycles Model points out that trendig strength may skyrocket over the weekend.
Tomorrow’s options chain shows Max Pain at 13.50. There is virtually no short gamma, while long gamma begins at 17.00.
ZeroHedge remarks, “Well bid VIX
You watch well bid VIX closely…”
TNX broke through Intermediate resistance at 45.08 at the announcement of the PPI before receding back beneath it. This may be an indication that inflationary pressures may have their sway. Today is day 256 of the Master Cycle. The MC low may have been made on May 7. A close above Intermediate resistance may confirm that low and offer a buy signal for higher rates.
ZeroHedge remarks, “Ahead of tomorrow’s CPI, traders are eyeing this morning’s Producer Prices for any hints that the disinflation trend will return…or not.
The answer is “not!”
April Producer Prices rose 0.5% MoM (vs +0.3% exp), with March’s +0.2% MoM revised down to -0.1% MoM. The downward revision did not stop the YoY read rising to 2.2% (from +2.1% in March)…”
USD futures have declined to 104.88 and appear to be heading lower. Critical support lies at the 50-day Moving Average at 104.25. The Cycles Model indicates that lower USD prices are possible through the weekend. The alarms about the loss of USD dominance are growing more strident. However, there is no other currency that can match the depth of the USD.
ZeroHedge notes, “The total debt owed by the United States federal government has reached incredible levels. Today, the total is $34,541,727,970,599.17 – but by the time you read this article, it’ll probably be higher.
I say “probably” because the debt is growing exponentially that by the time you read this, it’s quite possible that another few hundred billion have taken the total over $35 trillion.”
The Shanghai Composite Index may have reached its Master Cycle high last Friday on day 259 of its Master Cycle. It is consolidating near the high. Should it decline, critical support lies at 3058.00-3068.00, where a sell signal may be confirmed. All indications point to an aggressive sell signal.
ZeroHedge observes, “The latest money data from China shows its capital-outflow problem is worsening, pressuring policymakers to allow a further weakening in the currency.
China released money and inflation data over the weekend. CPI and PPI were not great reading, but money supply data was even more downbeat: M2’s growth disappointed, while M1 growth is moldering, falling 1.4% year-on-year versus +1.2% expected.
Real M1 growth is now also contracting, which is ominous for China’s thus far gingerly-improving growth.”
