1:19 am
SPX may be threatening to make a Key Reversal today. A decline beneath 5286.00 may make it occur. Should it happen, the top is in. Forget about all the happy talk. The party may be over.
ZeroHedge notes, “This is a RINO global equity market – “Recession in name only” – according to Goldman Sachs flow-of-funds guru Scott Rubner, as he sees global wall-street starting their great American BBQ party on a positive tone.
Here is Rubner’s quick rundown of the most important positioning dynamics in the marketplace right now.
As investors return from the Memorial Day long weekend, we think this FOMU, “fear of materially underperforming” behavior will start to kick off.”
8:00 am
Good Morning! Have you been praying?
SPX futures have risen to 5350.00 thus far this morning. The initial target may be near the 2-hour Cycle Top at 5353.80. Unfortunately, that may only be a minimum. The top may be as high as 5462.00, over a 100 points higher. This may be due to a combination of factors. The obvious one is that the crowd seems oblivious to risks being posed to the equities, which are very near a 4-year Cycle Top. Sentiment is giddy, with FOMO being the primary driver. Another factor is that liquidity is being pumped into equities by the powers that be. Whether purposefully or inadvertently, a temporary liquidity surplus in the Treasury is being sopped up by equities, as there are few other alternatives that are attractive.
Technically, we can see a second Triangle formation, a most unusual occurrence, since triangles usually occur only once (then done). Triangles usually forecast the final probe to the end of a Cycle. Last week’s Triangle formation gave a high confidence signal that the final probe would end the rally Monday. However, the second Triangle now proclaims yet another probe to the all-time high. What you see is a fractal repetition at two different scales. Fractals are organic. In the case of stock formations, it is due to human behavior patterns. The general rule in the markets is alternation, not repetition. That is why two Triangles are so rare.
Today’s options chain shows Maximum Investor Pain at 5310.00-5320.00. Long gamma may begin at 5325.00 while short gamma may not start until 5270.00. A very bullish setup, until the wheels fall off.
ZeroHedge reports, “Global markets rallied and US equity futures are sharply higher, poised to push the S&P to a new all time high, after blowout earnings from Nvidia reassured investors that the global artificial-intelligence juggernaut will keep powering equity markets. As of 7:30am, S&P futures were 0.6% higher and Nasdaq futs gained 1.0% entirely on the back of Nvidia’s stunning results which saw the company not only hike its Q2 revenue guidance to a consensus-busting $28BN but also announced a 10:1 forward stock split. Elsewhere, the Bloomberg’s dollar index retreated after touching a one-week high while US Treasuries inched higher after losses on Wednesday; European bond markets showed little reaction to the latest PMI report that revealed private-sector business activity at its highest in a year in the euro area, suggesting an economic rebound is taking hold. Oil was flat; bitcoin traded around $70k while Ethereum looked poised to break above $4,000 on today’s SEC approval of an ETH ETF. It’s a busy day on the macro front with data from the Chicago Fed, jobless claims, Mfg and Service PMIs and New Home Sales on deck.”
NDX futures are at an all-time high of 18940.00 thus far. The probability of reaching 19000.00 is very high. In fact The Cycles Model suggests a top near 19300.00. However, be warned that this is the final probe to the ATH.
Today’s options chain shows Max Pain at 18800.00. Long gamma begins at 18850.00 and may run to 19200.00, while short gamma may begin at 18770.00.
ZeroHedge remarks, “As discussed in our preview, Nvidia has been called the mother of all earnings — the “single most important stock on the planet” according to Goldman – and for good reason: it accounts for 5% of the S&P. This morning, Mizuho’s desk analyst even said “they are the market in AI in many respects.”
So intense is the interest in today’s print that according to Bloomberg, some investors and onlookers I’ve heard from are making assessments of Jensen Huang’s body language when I spoke to him on Bloomberg Television in Las Vegas on Monday. They want any and all clues about whether this is going to go well. My conclusion from that conversation: Nvidia knows it needs to make sales beyond just cloud providers and is seeking fortune in enterprise and government markets (with help from Dell).”
VIX futures have made another low at 11.52 this morning, on day 280. This low has not been seen since November 2019, 4 1/2 years ago. The record all-time low (since 1990) was made in November 2017. Dealers are massively short the VIX. As the VIX is a small index, it is easier to front-run the market. However, when the Cycle changes, the blow-back may be extreme.
The May 29 options expiration shows only long gamma from 12.00 to 20.00. There seems to be no expectation of a blow-out reversal.
TNX appears to be consolidating around the 50-day Moving Average at 44.40. The Master Cycle low was made on May 16. The current consolidation may be a wind-up for a substantial move higher, as Trending Strength is on the rise and may come in strong over the Memorial Day holiday, leaving investors high and dry as rates rocket higher. Most investors fail to realize that the uptrend started in late December. A Wave (C) may offer a powerful surge to new heights.