11:36 am
The Agriculture Index has found support at the 50-day Moving Average at 385.35 and is moving toward the upper trendline near 400.00. A breakout above that level puts the Ag Index in a firmly bullish trend that may last for several years. It is on a buy signal.
ZeroHedge comments, “I never imagined that we would ever see a time when it takes $177,798 for a family of four to live comfortably in the United States. Unfortunately, that day has arrived. Our leaders have been pursuing highly inflationary policies for many years, and now we have reached a point where inflation is wildly out of control. In fact, the latest wholesale inflation figure that was released on Tuesday came in much higher than expected. Sadly, this is just the beginning and we are in far more trouble than most people realize.”
11:11 am
BKX, our liquidity proxy< is still marching higher. However, the Cycles Model suggests the rally may halt by the end of the week. Its potential target may be the Cycle Top at 111.25. Look for a final probe higher this week to the Cycle Cycle Top. Once accomplished, the wheels come off.
ZeroHedge reports, “In the first – but certainly not last – major shake up at a key US financial regulator under the Biden admin, Federal Deposit Insurance Corp. Chairman Martin Gruenberg bowed to pressure to resign from the bank regulator after an external investigation found widespread sexual harassment at the agency and lawmakers of both parties berated his leadership, capping a nearly two-decade career at the agency.
In a press release, Gruenberg said he would resign once a successor had been confirmed, avoiding an outcome that would leave FDIC Vice Chairman Travis Hill, a Republican, as the agency’s acting chairman. Hill is a former staffer at the agency who has served on the five-member board for about a year.”
9:35 am
Good morning!
SPX has broken out of its uptrend this morning, giving it a sell signal on the two-hour chart. The trendline is near 5305.00. A decline beneath 5283 may confirm the signal. SPX made its Master Cycle high on Thursday, day 258. However, the lack of movement for th epast week is causing the bears to capitulate.
Today’s options cahin shows Max Pain at 5310.00 Long gamma begins at 5320.00. Short gamma starts at 5300.00.
ZeroHedge reports, “US futures are flat, reversing earlier losses, with European bourses and Asian markets all lower as the international risk-off tone carries over to the US pre-mkt, likely driven by a desire to see the NVDA print before determining near-term direction. Until then, markets are hunting for catalysts and drifting as they wait, with US stock futures unchanged as of 7:00am, and Nasdaq futures down 0.1%. Bonds caught a bid with yields down 2-3bps across the curve, pressuring USD. Commodities are also lower with weakness across all three complexes but with some safety being found in base metals: oil prices are a little lower, while copper and gold prices have slipped a little from the records they notched up.The macro focus will be on Fedspeak with yesterday’s batch of Fed speakers, not market-moving. From a micro perspective, Day 2 of the JPM TMT Conference will be the focus.”
VIX is still consolidating near Friday’s low. While the low has been made, the Cycles Model suggests trending strength may appear this weekend. Dealers are loaded up with shorts, leaving the marketplace in a “boring” mood. This could easily change after options expiration.
Tomorrow’s monthly options expiration shows Max pain at 15.50. Short gamma occupies the territory between 12.00 and 15.00. Long gamma begins at 16.00 and remains strong to 60.00.
TNX has slipped beneath the 50-day Moving Average at 44.28. However, the buy signal has been made. Trending strength may begin as the week continues, with peaking strength arriving over the weekend.
ZeroHedge remarks, “Why Next Time May Be Different (And Worse)
In our last post (Maybe the Biden Administration is Damaging The Dollar Intentionally), we included a chart showing Chinese dumping of Treasuries.
British economist Philip Pilkington uses that chart as a jumping off point for the disturbing X thread below. He points out a key difference in Chinese ownership of U.S. Treasuries now:
It used to be that these bonds were bought by China and other governments/central banks. These were stable buyers because it was part of their trade strategy – prop up the US trade deficit to sell more exports. Now increasingly they are bought by private foreign investors.”
Gold futures have pulled back from yesterday’s high at 2454.20 to 2409.55 this morning. It is in the final two weeks of the current Master Cycle, giving it room to rally to a possible 2500.00. Be aware that this may cap a series of higher Cycles that lead to a major correction.