2:26 pm
SPX has made its target. Prepare for a reversal. An aggressive sell signal may be made beneath the 2-hour Top at 5290.00. Confirmation lies beneath the 50-day Moving Average at 5148.50.
9:55 am
SPX is approaching its target near 5300.00. The reversal may happen either later today or early tomorrow, day 258. Everyone seems to be predicting a rate cut by September.
ZeroHedge comments, “With the CPI report came in on top of expectations on 3 of the 4 closely watched metrics, with just headline CPI coming in at 0.3%, just shy of the 0.4% expected (with the retail sales print coming in far uglier and missing across the board), there has been some debate among the usual commenting suspects whether this inflation report was enough to tip the scales to an earlier rate cut or not, although the consensus seems to suggest that the print was enough to keep September, if not the July, FOMC meeting in play for a rate cut.
7:45 am Note: I have shut off my comments section, as I have been getting over 1000 spam messages daily. The majority appear to be generated by Russians, but more likely to be AI generated on a massive scale.
Good Morning! Have you said your morning prayers?
NDX futures have risen to 18340.70, just 124 points from a new all-time high. The 50-day Moving Average is at 18955.00. Today is day 257 of the Master Cycle. What is normally good news is also a warning that it may end sooner than one can imagine. We are living in an Apocalyptic age. The first horseman has already appeared in 2020. A white horseman (WHO) wearing a crown (coronavirus) has conquered the entire world with its shutdowns. The next horseman is war, in which many more civilians than soldiers will be killed and maimed.
Today’s options chain shows Maximum Investor Pain at 18300.00. Long gamma may begin at 18340.00. Short gamma starts at 18270.00.
ZeroHedge remarks, “There are two classic propaganda narratives used by governments when it comes to keeping the public invested in any war campaign that does nothing to advance their national interests:
- First, there’s the “commitment” lie, which says that once you step in to support a war effort you then must stay exponentially committed, even if that war effort is exposed as pointless. Anytime the public pulls back from that war in a bid to reconsider what purpose it serves they are ridiculed for potentially “risking lives” and setting the stage for defeat. In other words, you must support the effort blindly. You’re not allowed to examine the conflict rationally, because who wants to be blamed for losing a war?
- Second, there’s the “domino effect” lie, which says that if you allow a particular “enemy” to win in one conflict, they will automatically be emboldened to invade other countries until they own the entire planet. It’s the same claim used to trick the American populace into supporting the war in Vietnam and it rarely turns out to be true. In fact, nations that engage in regional wars tend to be so weakened by the fighting that they don’t have the means to move on to another country even if they wanted to.”
SPX futures reached an overnight high of 5252.90, less than 12 points from the all-time-high. The structure allows a marginal new high before reversing. However, SPX may add another 100 points if CPI is cooler than expected.
Today’s options chain shows Max Pain at 5220.00. Long gamma begins at 5250.00 while short gamma starts at 5220.00.
ZeroHedge reports, “Equity futures were set to hold yesterday’s gains ahead of today’s CPI report, but will move violently either higher or lower after today’s CPI number is released, which will either validate or reject Jerome Powell’s latest signals that interest rates will be higher for longer (our CPI preview is here). European and Asian stocks also gained, and the MSCI All Country World Index extended its longest run of gains since January. At 7:15am ET, futures contracts on the S&P 500 were little changed with small-caps catching a bid, while the MSCI All Country World Index extended its longest run of advances since January. Nasdaq 100 futures were also flat after the underlying index hit an all time high on Tuesday. Bond yields are down 1-2bps across the curve with the USD seeing some weakness. Commodities are higher, led by Energy and Precious Metals. On the macro front, both CPI and Retail Sales at 8.30am ET (previews here and here).”
8:43 am: We now have our answer. ZeroHedge reports, “After a fourth straight month of hotter than expected PPI, analysts’ expectations for CPI were tightly ranged around 0.3-0.4% MoM and printed +0.3% MoM (slightly below the 0.4% expected). The YoY headline CPI fell to +3.4% as expected from +3.5% prior
VIX futures are consolidating within yesterday’s trading range. It is coiled near its Master Cycle low, so a hard break is most likely to the upside. The Cycles Model suggests the VIX may get a jolt of strength over the weekend of the Nineveh Cycle. In addition, the rally may last up to two months, giving the VIX a lot of room to rally, possibly to 100? Analysts are asking, “How Low Can VIX Go?”
The May 15 options show Max Pain at 13.00-13.50. There is no short gamma. Long gamma begins at 17.00 and may rist to 60.00.
USD futures declined to the mid-Cycle support at 104.25 on day 250 of the Master Cycle. The USD Cycles have been longer than normal since the first of the year. Today could be the MC low. The Cycles Model indicates that Trending strength may return to the USD over the weekend.
TNX declined to the mid-Cycle support at 43.40 this morning. Futures were lower, at 43.38 on day 257. This may be the end of the line for lower rates as other considerations, such as war, resume their commanding position.
Earlier, ZeroHedge suggested, “Perhaps taking a cue from our CPI commentary last week in which we explained why today’s inflation print will likely come in on the dovish side after beating estimates for 5 months in a row…
… moments ago 10Y yields plumbed fresh multi-week lows, sliding to just above 4.40% (from a high of 4.65% two weeks ago), ironically the lowest lowest since the last CPI release five weeks ago….”
The Ag Index is in a corrective mode after making its Master Cycle low on May 2. The correction has a few more days to go with a possible target being the 50-day Moving Average at 383.28. The real fireworks come at the breakout above the upper declining trendline at 400.00. Ag prices have completed their 2-year decline on February 26, but the rally off the low has not been remarkable. The next phase of the Cycle may be truly remarkable, starting next week.
The third horseman of the Apocalypse is famine. Forces have been set into motion that not only mean higher food prices, but shortages, as farmers have been forced to cull their herds and flocks directly or indirectly by government mandates.
ZeroHedge remarks, “The concept of mass starvation has not been in the forefront of American society for a very long time. Even during the Great Depression the US was majority agrarian and most people knew how to live off the land. In fact, the US has never suffered a true national famine. There have been smaller regional instances of famine (such as during the Dust Bowl in the 1930s), but nothing coming remotely close to the kinds of famines we have seen in Asia, the Eastern Bloc, Africa or the Middle East in the past 100 years.”
ZeroHedge observes, “Rice is a staple food for over 3.5 billion people worldwide, especially in Asia, Latin America, and Africa. It’s grown in over 100 countries, with 90% of the world’s rice produced in Asia. We have been tracking the prices of Thai white rice, which surged to 15-year highs in 2023 and has since consolidated at these highs with risks of a further upside breakout. ”